Key Concepts and
Tips for IRA Real Estate Investing
by Clay Malcolm
How do Real Estate IRAs help real
estate Investors?
Retirement savings that are in IRAs
can be active in real estate investing.
If you have expertise in real estate,
you can put that knowledge to work
for your retirement funds. Many in-
vestors have their IRA or old 401(k)
“on the sidelines” because they are
not comfortable with the erratic per-
formance of publicly traded securities
like stocks and mutual funds. Com-
panies like New Direction IRA, Inc.
that specialize in self-directed IRAs
that can be invested in real estate
assets offer the investor an asset class
that they know and understand.
Knowing that IRAs can invest in all
kinds of real estate-based “alterna-
tive” assets can benefit the real estate
investor in 2 primary ways: 1) Invest
your retirement account into real es-
tate assets. This takes full advantage
of the tax advantages of the account
type as well as your real estate exper-
tise. 2) Use other investors’ IRAs to
fund your personal real estate deals.
You can raise money for your deals
by informing investors that their IRA
can put money into your project.
Core Concepts
An IRA is its own legal and financial
entity and it is separate from your
personal finances. It has its own
titling which must be used on all
legal documents. When an IRA buys
an asset, it pays for the purchase and
maintenance expenses and receives
all the revenues.
TIP: A self-directed IRA is guided by
Realty411Guide.com
the account holder, but that IRA is limited
in how much financial contact it can have
with the IRA holder’s personal finances.
Contribution and Distribution rules for
self-directed IRAs that hold real estate
assets are the same as IRAs that hold
stocks and bonds. Keep in mind that dis-
tributions can be taken in-kind as well as
in cash. This means that an IRA holder is
not required to liquidate real estate assets
and distribute cash to themselves; they
can simply distribute the actual real estate.
TIP: Consider your desired distribution
plan can have an impact on which invest-
ments you make.
Traditional IRAs, Roth IRAs, HSAs, SEP
IRAs, SIMPLE IRAs, and 401(k)s are all
account types that can acquire real estate
as an investment. TIP: The key to this
ability to purchase real estate is having
PAGE 18 • 2014
your account at a provider that handles real
estate assets.
An IRA can use an LLC or entity, but it
is not required. An IRA can have direct
ownership in a real estate asset and/or in
an LLC. TIP: Utilizing an LLC in conjunc-
tion with your IRA is a decision that the
account holder makes.
An IRA (or other account type) can:
An IRA can purchase a piece of real estate
and then receive all the income generated
by that property via rent and/or profit from
selling it. And whether it is rental income
or proceeds from a sale, the returns stay
tax advantaged according to the account
type. The IRA holder decides what to do
with the incoming cash: buy another asset,
Continued on pg. 109
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