In our continued pursuit of excellent ways to invest in real estate, we’re going to devote some time in the coming days to ways you can do just that with your Individual Retirement Account (IRA). Yes, your eyes did not cross while reading that last sentence. It is possible to use your IRA to build a real estate portfolio. While this style of investing may not be the pot of gold at the end of the rainbow for everyone, there are distinct advantages and disadvantages, depending upon your personal financial situation.
This is going to be more information than can comfortably fit into a single post, so we’ll break it up into bite-sized chunks. Remember to check back because real estate investing with IRA’s might be something that makes a big difference in your life.
First things first. So we all start on the same footing, let’s define what an IRA is. It’s pretty simple. We’ll try to leave the lawyerese out of it and speak in plain English. An IRA is nothing more than a tax-deferred retirement account that lets you put aside money each year for the purpose of savings or investment. You can begin withdrawing it at age 59 and ½, or earlier if you don’t mind paying a 10% penalty. Big deal, right? It is a big deal when you toss in the fact that all earnings from investments made through your IRA are tax-deferred until withdrawal.
When you put money into an IRA, it is called a contribution, which may or may not be tax deductible depending on factors which we’ll talk about next time!
Until then, remember the IRA (not the Irish Republican Army)!
