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Key Tips for investing In Real Estate Using Retirement Funds (IRA, 401K)

27 Feb 2019 7:22 PM | Lucas Lombardi (Administrator)

Key Tips for investing In Real Estate Using Retirement Funds (IRA,
401K)

Using retirement funds to invest in real estate offer retirement account holders several positive financial and tax benefits: 1) understanding of the asset and business model, 2) diversification, 3) inflation hedge, and 4) the ability to generate tax-deferred or tax-free (in the case of a Roth) income or gains.

For example, if a person acquired a piece of property with retirement funds for $100,000 and later sold the property for $200,000, the $100,000 of gain appreciation would generally be tax-deferred.

However, most people mistakenly believe that their retirement accounts must be invested in traditional financial related investments such as stocks, mutual funds, exchange traded funds, etc. Few Investors realize that the Internal Revenue Service (“IRS”) permits retirement accounts, such as a Self-directed IRA or 401(k) plan, to invest in real estate and other alternative types of investments. If your employer 401(k) plans do not offer real estate as a plan investment option, establishing a self-directed IRA is quick and relatively inexpensive.

The most challenging aspect of investing in real estate using retirement funds is navigating the IRS prohibited transaction rules (Internal Revenue Code Section 4975) that prevent the retirement account holder from making investment that will directly or indirectly benefit ones self or any disqualified person.

In order to comply with regulations and understand what instruments are suitable, you should always consult with a tax professional for further guidance and have a paid custodian to keep track of and reports to the IRS on deposits, withdrawals, and year-end balances related to your investments.

To invest the process is simple:

1) The Custodian opens a new (Self-Directed) IRA for you.

2) The Custodian helps you transfer, all or a portion of, your existing retirement money to your new IRA.

3) The Custodian invests your new IRA directly into the Real Estate Fund, Private Equity or Property.

As conclusion, investing in Real Estate using retirement funds is not only allowed but also simple and affordable; and it provides investors a financial instrument to diversify their portfolios and enhance returns.

About the author

Rodrigo Allub is president of Houston Equity Partners (HEP), a Houston-based commercial real estate private equity group that allows “accredited investors” to invest in a well-balance portfolio of Industrial & Self-storage income producing assets. As of today, HEP has participated in asset acquisition of 560,000 sqf. for $41 Millions. Houston Equity Partners - Round III private offer (https://www.hepinvestments.com/uploads/1/0/4/9/104900685/houston_equity_partners_-_teaser_401k.pdf) is a qualified Alternative Investment for IRA (401k, etc.). To learn more, please contact (hep@hepinvestments.com)

Follow us – linkedin (www.linkedin/company/houston-equity-partners)

Webpage – www.hepinvestments.com




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The Argentina Texas Chamber of Commerce is the primary advocate of Argentina and Texas business communities and is dedicated to building economic prosperity for both Countries. The Chamber of Commerce is a Member-driven organization.

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Houston, TX 77056

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Phone:  +1 (713) 969-5036

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