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Self-Directed IRA Rules: Financing Real Estate Abroad

18 November, 2017

Self-Directed IRA Rules: Financing Real Estate Abroad

Just because some IRA custodians don’t permit “non traditional” or alternative investments like real estate to be purchased in a retirement account and most stock brokers won’t tell you how to do it doesn’t mean that buying real estate with an IRA account isn’t perfectly legal, if you understand the current Self-Directed IRA rules to buying property. 

Buying Real Estate with a Retirement Account 

The main reason many IRA custodians and most brokerage firms don’t want to get involved in holding alternative investments like income producing property is simple – they can’t charge fees and commissions on these types of investment vehicles. Also, some custodians and stock brokers simply don’t want to put forth the effort to complete the necessary paperwork – again, because they don’t stand to gain much for their efforts. Fortunately, it’s easy to set up an IRA account that permits the transfer of funds into it from your existing IRA or 401(k) to invest in real estate. 

“To buy real estate, foreign or local, with your retirement funds, you can set up what’s called a ‘Self-Directed IRA’”, wrote Live and Invest Overseas.

Buying Real Estate with a Retirement Account

This basically means that you will be empowered to direct the investment of the funds… Provided you follow the rules for buying real estate with an IRA, which involves having the new custodian hold the property in the account. 

“In the form of a Self-Directed IRA, investors are now able to invest directly in real property”, wrote Investopedia. “In some cases, IRA owners are given checkbook access to their IRA balances”.

Also Read: 

4 Advantages of Buying Real Estate with an IRA Account 

Why a Self-Directed IRA Account is Better Than a 401(k)

Why Playa del Carmen Real Estate is Ideal for Vacation Home Rentals

To buy real estate, foreign with your retirement funds, you can set up what’s called a ‘Self-Directed IRA

Using a retirement account to invest in real estate has become an increasingly popular option for investors who want to cash in on the return potential of real estate while enjoying a hedge against the draining influence of inflation. As a result, IRAs that are created for the primary – or even sole – purpose of buying property have seen a recent uptick in popularity. 

The investment options for this type of IRA account are not typically limited to stocks, bonds and mutual funds, etc., although these types of investments are still permitted. Just keep in mind that not all custodians permit all asset classes, so be sure to check before establishing a new retirement account. Whenever possible, it’s also advisable to work with an experienced real estate investment advisor who is familiar with the required paperwork to complete the process and can help you through every step of buying real estate with an IRA account. 

Are you happy with the performance of your retirement accounts? Let us know in the comments! 

Would you like to know more about how to invest in real estate using an IRA account? Click the link below and discover why buying real estate with an IRA in an ideal location can diversify your portfolio and provide a hassle-free revenue stream to dramatically improve your ROI!

Want to Know How to Invest in Real Estate with your Self-Directed IRA?

Topics: Real Estate IRA Alternative Investments Learn How

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