What Real Estate Investors Want in Their IRA Custodian | Trust Company of America - Millennium Trust Company

What Real Estate Investors Want in Their IRA Custodian

November 12, 2020
By Millennium Trust
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Many investors either invest in real estate themselves, know someone who does or have eyed an investment property at some point in time. An April 2019 Gallup survey showed that 35% of Americans view real estate as the most favored long-term investment.

Despite a relatively high level of interest and awareness, very few people know that real estate investments can be held in an IRA, which can provide tax-advantaged growth, long-term diversification and can be a source of rental income.

Steve Blim, Team Lead on Millennium Trust’s Real Estate team, as well as state-certified appraiser and licensed real estate broker, shares his experiences in the industry and with clients over the years.

You Don’t Know What You Don’t Know

“The fact that you can invest your IRA in real estate is one of the best kept secrets in the world,” says Steve. “I was in the real estate industry for years and didn’t even know. I have come across many realtors, title companies and attorneys who didn’t know either.”

Once an investor is aware of the fact real estate can be held in an IRA, the biggest hurdle becomes education.

Steve works with clients on a daily basis to help them understand what they can or cannot do in their IRA, and wants potential investors to know that investing in real estate in your self-directed IRA is not “too complicated” if you have a trusted custodian that can guide you along the way.

Making the Most of Your (Retirement) Money

“Most people we come across have been eyeing a vacant lot or beach house in their vacation town, for example, but may think ‘I can’t do this while I’m putting my kids through college.’”

The positive? Maybe your IRA can! When it comes to investing in real estate, there are limitless opportunities, but many people just don’t realize that they can invest in them with their IRA.

“Can I do this in my IRA?”

The short answer is yes, you can. But the IRS has strict rules and regulations for holding real estate investments in a retirement account, but Millennium Trust – and especially your accountant or tax advisor – can help you navigate the complexities. The main things Steve’s team helps clients or prospective clients understand are:

  1. What types of investments are allowable and if allowable will Millennium Trust do it
  2. Who may be a “disqualified person” and what that means
  3. What the individual can and cannot do as it relates to this IRA investment (aka prohibited transactions)

“The ability to help a client understand what the IRS rules say you can or cannot do – and the implications if a client were to ignore that – is helpful,” explains Steve. “That’s why it’s important to have the right team of real estate IRA experts behind you.”

Prohibited transactions, such as personally using the property or having the IRA purchase the property from the IRA holder can result in serious tax penalties.

As Team Lead, Steve ensures the Real Estate Client Services team is thoroughly educated on the implications of prohibited transactions in order to adequately communicate with clients.

“Our clients greatly value that they can actually call and talk to an expert who is dedicated to their transaction.” Steve continues, “They appreciate that we know what we’re talking about and can answer their questions – and if we don’t know the answer, we’ll get the answer so they have the information to make good decisions.”

As the IRA custodian, Millennium Trust does not provide investment, legal, tax or compliance advice, but can help clients navigate their IRA and empower them to make the best decisions for themselves.

“Because we spend that time up front on education, our clients have a high level of trust in us and that their transaction will go as smooth as possible. That’s what is most important.”

Millennium Trust also recently launched a real estate debit card as part of our dedication to continuously enhancing the client experience. “The real estate debit card has been a great help to clients. Expenses are taken care of in real-time, there’s less paperwork and emergency maintenance situations on a property can be paid for immediately from the IRA.”

Learn more about investing in real estate with a self-directed IRA.

View our Real Estate Guide

The material in this blog is presented for general informational purposes only. The information presented is not investment, legal, tax or compliance advice. Millennium Trust Company performs

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