According to the IRA Financial Group in New York—450 million dollars of real estate has been purchased inside the protections of IRA’s within the last 12 months. Why? Obvious answer –people are fed up with the lack of yield and gyrations of the stock market.

Anything can be purchased within in IRA –from art work to homes. You need a custodian and for all practical purposes –in cash. The property is registered in the IRA as owner and you need a custodian. ( I have a reference for a company in Tampa.) All cash flows– in and out of the IRA. You can not pay the electric bill—the IRA does. You can not pay the tax bill—the IRA does. You must have some cash for a cushion to cover these kinds of expenses and maintenance. Those closer to a mandatory distribution(70 ½) must be careful regarding enough cash to handle a distribution without liquidating the real estate.

A bit more complicated—yes. Difficult—no. You just need to know the rules. You can not live in the property. So you will be a landlord IF you intend to rent the property. You can not rent the property to your wife. I read the regs as it must be an arm’s length transaction.

This is a little known idea well worth investigating to round out your portfolio. Of course– if you sell the property inside the IRA—no taxes. Great country America!!

Michael David Belsham has had his mortgage practice for nearly 20 years and is a respected member of the community via his straight forward advice and boutique service. Contact Mike below.

Filed under: Investors