Self Directed IRA (SDIRA) for Real Estate
As part of our Client Appreciation Program this week we’d like to provide you with some information on Self Directed IRA (SDIRA) and how we use SDIRAS for Real Estate. First, there are several types of IRAs, but the most common are Traditional and a Roth IRA. You need to have an income or be married to someone who earns an income, to open either type of IRA. Both have contribution limits of $6,000 a year until you turn 50. After that, you can add an extra $1,000 annually as a “catch-up” in your final years of working. The government wants you to start withdrawing from the IRA at age 72 and one half through required minimum distributions (RMDs), and pay taxes on it. A Roth IRA, on the other hand, does not have RMDs and can be passed on to your heirs without a tax penalty.
Withdrawals on the two differ as well. With a Roth IRA, you can withdraw your contributions at any time for any reason without being penalized. However, if you want to withdraw any earnings or interest on those contributions, you must be over 59½ and your initial contribution must have been made at least five years before avoid paying a 10% withdrawal penalty.
A self-directed individual retirement account (SDIRA) is a type of individual retirement account (IRA) that can hold a variety of alternative investments normally prohibited from regular IRAs. Although the account is administered by a custodian or trustee, it’s directly managed by the account holder—the reason it’s called “self-directed.” Available as either a traditional IRA (to which you make tax-deductible contributions) or a Roth IRA (from which you take tax-free distributions), self-directed IRAs are best suited for savvy investors who already understand the alternative investments and who want to diversify in a tax-advantaged account. One of the items that can be purchased inside of an SDIRA is Real Estate. We rolled the money over from our 401K to an SDIRA and started lending, then partnering with others to buy Real Estate. Our SDIRA is the partner which means profits go back to the SDIRA, tax-free. At least tax-free until we make a withdrawal.
Now we’ve been doing this for a while & while we’re professionals in Real Estate we rely on a professional in SDIRA to keep us up with the rules and regulations. One of those professionals is Dan Grossman from Midland IRA. To learn more about SDIRA check out the interview with our local partner Dan Grossman from Midland IRA check the interview here.
As you know, we greatly value the business we have with you. We’re always looking to increase our business and work for more good people like you. Do you have any friends, family, or colleagues in need of real estate brokerage services? If so, call us at (872) 222-5767 or click here and we’ll do the rest!