Self Directed IRAs
I'm curious how many people out there are using self-directed IRAs for real estate and if so with which companies. Mid Ohio Securities seems to be the biggest one. Anyone had any direct dealings with them? This is an area where it seems that you can have your cake and eat it too. I'm very intrigued because this is an area where sitting on vacant land long term may be worth the wait. My concern is what the ongoing costs will be as far as managing the IRA account and if they are cost prohibitive.
A little information on self-directed IRAs. They are only to be used for your retirement fund because any money you make from a property bought by your IRA has to go right back into the IRA. So, if you buy a property using the funds in your self-directed IRA and then sell it, you will have to put all proceeds from the sale back into your IRA. The great part about building your retirement fund with a self-directed IRA is that you get to choose how to your money is invested. Mid Ohio is a popular one.
Tanya
You also need to review the state and federal income tax implications when deciding whether to invest with your self-directed IRA or as an individual. For example, capital gains in a self-directed traditional IRA are tax deferred until you withdraw the funds, but are taxed at ordinary income tax rates at that time. You need to decide if you want to use the lower capital gain taxes now or get assessed the ordinary income taxes at retirement. You also can not take advantage of depreciation on your personal income tax return if the property is held inside your self-directed IRA because you do not own the property, your IRA does. There are a number of other issues, but this is just to point out that there are other tax issues to evaluate. Please contact us if we can be of assistance or answer any questions - Diversified Retirement Services Corporation.
Bill Exeter
Diversified Retirement Services Corporation