Later-in-Life Benefits to Self-Directed IRAs

Five Little-Known Benefits to the Self-Directed Real Estate IRA

The concept of self-directing an IRA can be intimidating to a lot of investors. They do not know much about specific assets or investment classes, so they would prefer to outsource the thinking to a financial adviser. But to many, real estate is different. Real estate requires direct involvement—or at least management. That is why real estate investments in a Self-Directed Real Estate IRA often appeals to those investors who want to take control of their financial destiny.

However, not everyone knows why the Self-Directed Real Estate IRA is so beneficial—or why it can be such a tremendous way to start building a retirement investment plan. That is why it is important to understand the little-known benefits to building a nest egg with a Real Estate IRA:

Benefit #1: You Can Still Borrow Money in a Self-Directed Real Estate IRA

Sure, you can always borrow money in a Self-Directed Real Estate IRA. But the protections and regulations on retirement accounts sometimes have investors worried that they cannot always use leverage within a retirement account. The good news, you can. Non-recourse financing terms are acceptable within a Real Estate IRA and help ensure that the person who owns the IRA has a degree of separation from the retirement account itself.

Benefit #2: Collecting Rental Income Tax-Free

The ability to collect rental income at a profit is one of the most enticing aspects of real estate: mostly passive income that generates a consistent cash flow for investors and retirees. Within a Self-Directed Real Estate IRA, however, there is an added benefit, tax protection. The income generated by investments within an IRA is separate from income to the individual (which is one reason the IRS requires such clear boundaries between the IRA and the individual). That means consistent income from rent within the Real Estate IRA, even if the stock market is not performing well.

Benefit #3: Selling Real Estate and Protection from Capital Gains Taxes

Capital gains taxes can be a major reason some investors hold on to an investment for longer than they might need it—they don’t want the sudden tax liability that comes when they realize their capital gains. Within a Self-Directed Real Estate IRA, however, an owner can sell real estate easily without having to worry about the substantial capital gains consequences in the immediate future. This provides an extra degree of freedom in decision making for buying and selling real estate when the value is there to be realized.

Benefit #4: Real Estate Partnerships are Just as Easy

Real estate can be expensive. Anyone who has ever tried to build up a real estate career from the bottom up does not need to be reminded of that fact.

That is why it is so beneficial to partner up to make real estate investments, pooling together money to make those key purchases that could otherwise not be made.

There is a perception out there that using a Self-Directed Real Estate IRA makes this impossible. But you would be surprised. You can still partner up using a Real Estate IRA and make investments.

Benefit #5: A Self-Directed Real Estate IRA Keeps Things Simple

Getting personally involved with your real estate can sometimes muddy the waters. Real estate held within a Self-Directed Real Estate IRA, however, requires separation. You cannot live in a real estate investment held in your IRA. This will not only help you to become a better manager of your investments, but to better understand what it means to keep your assets and your personal life separate.

Interested in learning more about Self-Directed IRAs, download our free e-guide.  Contact American IRA, LLC at 866-7500-IRA (472) or visit us online at