Tips & Trends for the Flagstaff Real Estate Market:
Past Articles [December 2003]
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Real Estate in Your IRA Portfolio
As 2003 comes to a close many of us are looking to next year and how best to provide for our retirement. A little know IRS provision lets you extend your real estate purchasing with tax-deferred dollars. If your are interested in broad diversification you might be interested in a growing, trend among individual retirement account owners-investing some of their retirement funds in real estate.
Section 408 of the Internal Revenue Code permits individuals to purchase land, commercial property, condominiums, residential property, trust deeds, or real estate contracts with funds held in many common forms of IRAs, including a traditional IRA, a Roth IRA, and a Simplified Employee Pension plan, or SEP-IRA.
If the option of using tax-deferred funds to purchase property sounds appealing, you'll need to locate an independent IRA custodian that provides for real estate investments and work with that company to set up an IRA account before you purchase any property. Most traditional investment firms do not have the resources, knowledge or desire to handle real estate IRA’s.
To find a custodian that specializes in real estate I conducted an internet search using the term “real estate IRA”. I was surprised at the number of matches I found. Locally I am not aware of any custodians specializing in real estate, although there is a firm in Sedona that can help you with the process.
The whole procedure appears to be somewhat complex so obtaining professional help is imperative before you invest. A good place to start is with your accountant.
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