An SEP IRA. An investment property like a single family home. Ever thought that the two can’t mix, like they’re oil and water? You’d be surprised. With a Self-Directed SEP IRA, you’ll have the option of investing in the full range of retirement assets available: precious metals, private companies, tax liens, private notes, and, yes, real estate. And thanks to the higher contribution limits possible with a SEP IRA, you’ll have everything you need to put a significant portion of retirement money into income-generating real estate. Here’s how—and why—many people do exactly that.

Why Choose Real Estate within a Self-Directed SEP IRA?

There’s no requirement to own real estate within your Self-Directed SEP IRA. You can own any valid retirement asset within the account. But there are some reasons that real estate makes a natural fit for this type of account.

For starters, SEP IRAs have high contribution limits. These are pre-tax contributions, meaning that you can likely deduct the money you put towards your SEP IRA in a given year from your taxable income. You’ll then have to pay taxes on this income when you take money out of the account via distributions in retirement. In the meantime, the money you keep housed within the account can grow tax-free.

But back to those higher contribution limits. We don’t have to remind you that real estate can get expensive—requiring a lot of funds within an IRA to be able to make the purchases you’d like to make. You can use non-recourse loans within an IRA, of course, but it always helps to have more money in the account whenever possible. And since it can be easier to fill a Self-Directed SEP IRA with adequate funds than a Traditional or Roth IRA with lower limits, a SEP IRA can be a natural fit.

Additionally, having real estate within an IRA can be beneficial on its own. You can use real estate assets to diversify out of traditional retirement assets like stocks and mutual funds. You’ll have real, tangible assets within the account. Real estate is less liquid than stocks, which are easier to sell, but real estate also tends to be less volatile than stocks. You’ll shore up your retirement portfolio with a broader risk profile.

Investing in Real Estate with a Self-Directed SEP IRA

The problem for many investors? They think that a SEP IRA sounds complicated, let alone self-directing an account to hold real estate. But you’d be surprised how easy the process can be:

• Set up a Self-Directed SEP IRA. You’ll need some simple paperwork, likely working with a custodian that allows real estate investments. For example, if you reach out to American IRA, we can help you establish the SEP IRA.
• Fund the account. You have options for funding the account with rollovers, transfers, or contributions depending on your personal situation and the types of accounts you already hold.
• Identify the property you want to hold. Once you have the money in the account, you can start looking for investment properties that will fit. Direct your SEP IRA Self-Directed IRA administration firm to make the purchase on behalf of the IRA once you’re ready.

In all, holding SEP IRA real estate doesn’t have to be the complication you might think it is. In fact, having real estate in your SEP IRA might give you a new lease on the way you view retirement. But if you want to make it happen, don’t wait. Your investments can start building soon. Reach out to us here at American IRA to get started: give us a call at 866-7500-IRA.