Earn Tax-Free Income on Rental Property in Your IRA

Earn Tax-Free Income on Rental Property in Your IRA

The savvy individual knows a thing or two regarding the benefits of an IRA, which provides tax-advantaged savings for retirement. You may even know about the growing popularity of self-directed IRAs that allow account owners to invest in a myriad of alternative assets. Self-direction gives retirement plan owners control over their retirement funds and their investing decisions. Account owners can invest in things they personally understand—assets that reach far beyond the traditional stock or bond, alternative investments such as real estate. Real estate options present many unique opportunities, including the ability to invest in rental property in your IRA to build retirement wealth.

Not only can individuals invest in rentals, realtors can use their expertise to build wealth for retirement, too.

Why invest in rental property in your IRA?

Last year, Forbes published an article about rental property investments stating:

“Our Top 20 is a list of local markets where the odds of making a good investment in rental property are in your favor right now – and, equally important, where the odds of making a bad investment are low – because the number of renters is growing fast. So fast that brokers and builders aren’t yet aware of how much future demand there will be.”

So, rentals are a hot topic, even today. But, many people don’t know you can acquire these investments using a self-directed IRA. And, that’s why we’re here to fully explain it to you.

When you purchase rental property with a self-directed IRA, you have the potential of earning consistent monthly income on rent payments. You also have the potential to add to your retirement savings over time. When your rental property appreciates, you can sell it, and the earnings grow tax-deferred in your self-directed IRA.

Of all the potential benefits of investing in rental property with your self-directed IRA, it’s hard to beat the tax advantages. Time is on your side. Consider this: The rental income you earn remains in the IRA, where it grows on a tax-sheltered basis and can be used in the future for purchasing other assets or as additional savings for your retirement needs.

Types of rental property you can invest in:

  • Single and multi-family homes
  • Commercial property
  • Townhomes and condominiums
  • Offshore vacation property
  • and more…

The income your rental property generates is deposited into the IRA, and all expenses for the property must be made through funds from your IRA. In addition, all property repairs and maintenance should be performed by a third party. As with any retirement plan, IRS rules must be followed, and your due diligence is necessary to understand the rules regarding rental purchases as well as ensuring the property you purchase is viable with the potential to produce rental income.

The benefits of investing in rental property in your IRA are numerous; however, as any investor knows, real estate purchases are not without risk. In an article published by Forbes last year that lists the top 20 cities in America to invest in rentals states, ” As with any financial decision, you want to be well-informed and knowledgeable in the assets you choose. The more you know, the better your chances of growing the wealth you desire. Because, after all, retirement is all about dreaming today what you wish for tomorrow.

Earn Tax-Free Retirement Income on Rental Property in a Real Estate IRA infographic

Contact Midland IRA for information about investing in real estate and the tax-saving advantages you can enjoy with a self-directed retirement plan.