When you invest in real estate, you do so to make money – and making money means paying taxes.
Fortunately, there exist a variety of legal structures that allow one to avoid or reduce taxation on investments – and investments can include real estate. Today our office hosted a training by Scott Maurer of the Entrust Group on the topic of investing in real estate within one’s IRA or 401(k) retirement account.
As you already no doubt know, these types of retirement plans offer a variety of tax benefits that make them attractive for investments that are anticipated to produce either current income, appreciation, or both (and what investment isn’t anticipated to do at least one of those things?!?).
The training was fantastic. There is a great deal more flexibility than I had previously thought. And at the same time, it requires a lot of care to avoid mistakes that could trigger some pretty costly penalties. Fortunately, setting up and administering these investments is exactly what Entrust does. They do it well and they do it at modest cost.
For example, if your IRA or 401(k) doesn’t have enough money to buy an investment property, no problem. You can “partner” your retirement funds with ordinary funds (yours or another partner’s) or with another person’s retirement funds (your spouse’s, for example) – as long as the records are handled correctly.
On the other hand … want to rent that investment property to a son or daughter? Or use that vacation rental yourself a few weeks out of the year? That WOULD be a problem – IRS rules do not allow any personal benefit or dealing with lineal family members. Making that mistake could disqualify the whole investment, triggering back taxes and penalties.
www.EntrustTampa.com, 800-425-0653 for more information.