Do You Flip Homes? Here Are 3 Reasons for Using a Self-Directed IRA
For many investors, real estate is an attractive option. For those looking to invest in real estate or those that flip homes, self-directed IRAs could be a good option.
Self-directed IRAs for real estate investing allow investors to:
- Invest in what they know. Investors, like flippers, who know and understand real estate can decide how to invest the assets and direct the custodian appropriately.
- Easily access capital. If an investor finds an appealing real estate opportunity, but has limited cash available to purchase it, they can transfer cash from an existing IRA to a self-directed IRA to purchase the property.
It’s important to note that all income and expenses for the property must flow through the IRA. Working with a custodian that streamlines the process of real estate-associated purchases will help make the experience easier. - Gain tax advantages. Like other types of IRAs or qualified retirement accounts, any income or gains earned in a self-directed IRA are tax advantaged. However, you most likely need a specialty IRA custodian to hold real estate. In this case, investors may have more money working for them and available to fix-and-flip.
To reap the benefits of investing in real estate with a self-directed IRA, be sure to understand the IRS rules and regulations. This includes complex rules on prohibited transactions and disqualified persons. You should discuss these investments with your accountant or tax advisor prior to investing.
Choosing a custodian and team of experts on the nuances associated with real estate investing through a self-directed IRA is key.
Learn more in 3 Reasons for Using a Self-Directed IRA to Flip Houses by Tom Kurinsky on MarketWatch.com.
The material in this blog is presented for informational purposes only and does not constitute investment, legal or tax advice. Millennium Trust Company performs the duties of a directed custodian, and as such does not provide due diligence to third parties on prospective investments, platforms, sponsors or service providers, and does not offer or sell investments or provide investment, legal or tax advice.