This Spring Could Be The Best Time In Years To Use Your Self Directed IRA To Purchase Real Estate

March 28th, 2012

Since the creation of IRAs back in the early 1970s, the IRS has always permitted an IRA to purchase, hold, or flip real estate.   In fact, it states it right on the IRS website. By using a Self Directed IRA to buy real estate, you will be able to purchase raw land, domestic or foreign real estate, residential or commercial property, flip homes, and much more tax-free and without requiring custodian consent! You are in control of the house flipping transaction.

Many investors have been hesitant to invest in real estate in the current market.  But, there are many indications that this spring could be the best home buying season in years.  Morgan Brennan of Forbes reports that the spring season is looking good due to an increase in home contracts so far this year over the same time period in 2011.  There is an increased demand from buyers, which has reduced inventory levels.

“That increased demand from buyers has pushed inventory levels 19% lower than they were this time last year, with an estimated 2.43 million homes available for sale,” Morgan said in an article from 3/27/2012. “In fact, housing inventory is at a five-year low nationally right now. It means owners tinkering with the thought of selling have less competition to contend with, compared to the past five years. It also means housing may be inching toward a long-awaited recovery.”

This could be a great time to use your Self Directed IRA to purchase real estate and flip it for a quick profit.  Income or gains generated by an IRA generate tax-deferred/tax-free profits. Using a Self Directed IRA LLC to purchase real estate allows the IRA to earn tax-free income/gains and pay taxes at a future date (in the case of a Roth IRA the income/gains are always tax-free), rather than in the year the investment produces income.