Roth IRA Real Estate
Investing your Roth IRA in real estate can be incredibly lucrative when you consider the strengths of real estate investing and the tax-favorable status of the Roth IRA. The real estate market is not immune to fluctuation but neither is it as susceptible as many other types of investments. On the other hand, investing in real estate can be quite a bit more complex and timing is always at a premium.
With a traditionally custodied Roth IRA, your investment decisions are not just subject to the tax laws, they are also subject to the financial institution. You must pass investment decisions by your custodian and they must agree to its compliance with their plan document and you must pay all associated fees. For complex real estate deals, this can become quite expensive and the time constraints can take you out of the running for hot properties.
With checkbook control of a self-directed Roth IRA, however, you are given the freedom to act on properties whenever you wish (provided your IRA has the cash with which to do so). You can pay all expenses associated with the deal directly from the IRA (in compliance with the law) and avoid all of the additional fees traditional custodians would charge. Appropriately structured, your IRA is not limited to domestic real estate either.
Finding a Self-Directed Roth IRA Provider to open a self-directed Roth IRA, you need a favorable determination letter of your plan document or an opinion letter from an attorney which allows a company to custody your IRA. These can be notoriously difficult to obtain on your own. Fortunately there are several companies that have gone to the time and expense of obtaining the appropriate documentation and found custodians for self-directed IRAs. NAFEP is one of those companies, and from a fee-minimization standpoint they are one of the best.
Written By Scott Janko, The National Association of Financial and Estate Planning (NAFEP)
For more details on the Self Directed IRA -ICOSM Click Here.