Use Your IRA to Buy a Foreclosure or Short Sale Rental Property ...

If you are one of the millions of Americans who would love to take advantage of record low home prices and record high levels of foreclosures, but your cash on hand is?coming up ?little short? consider using a portion?of your IRA funds to buy a piece of rental property.

Millions of Americans have billions of dollars tied up in IRA?s that nay be?paying little to no interest or gains to?investors.? Maybe it?s time you considered diversifing from stocks or mutual funds??and?add some tempting real estate bargains?into the mix.

Here are the basic rules:

• The funds used to buy the property must be held in a self directed IRA.? You can not use 401K funds or Roth IRA?s to buy real estate,?but you can?roll over those funds into an IRA before you buy.
• ?The property you buy must be an investment property.?? You can not buy a second home or primary residence with IRA funds without paying a penalty.
• You must pay cash?for the investment property.? You can not borrow or take out a mortgage against?your IRA investments.??
• Monthly rental income must be placed back into the IRA account.
• When the property is Sold?the sale proceeds must be deposited back into the IRA.
• No taxes are due on rental income or capital gains?held in the IRA, until the money is withdrawn at retirement age, so earnings grow tax free.
• The IRA can pay all expenses associated managing and maintaining the property.
• You can?use a property manager or manage it yourself.

Real Estate IRA

Here is a?simple example of?how the investment could grow and fund your retirement.

• You buy a $100,000 rental property with IRA funds.
• You collect $10,000 a year in rent that is paid directly back into the IRA.?
• After 10 years, the entire $100,000 you invested in the home has been paid back into the IRA.? Bonus, you still own?the property and you can sell it?anytime you chose and put the proceeds into your account, too.
• You pay NO TAXES on income or capital gains until you withdraw money from the IRA.

Tax deferred gains

Buying a foreclosure with IRA money can be a great way to diversify your retirement portfolio and take advantage of historically cheap real estate prices and highly motivated sellers.? As with any tax related investment?ALWAYS consult your tax expert before investing.

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Source: http://www.infotube.net/blog/2012/03/use-your-ira-to-buy-a-foreclosure-or-short-sale-rental-property.html

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