Are you interested in becoming a fix-and-flip connoisseur? A Real Estate IRA might be beneficial for you. In this video, you'll learn how you can utilize your Real Estate IRA to invest in a fix and flip for retirement. For a deeper dive, read our recent blog: www.madisontrust.com/becoming...
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SCRIPT
In this video, you’ll learn how you can utilize your Real Estate IRA to invest in a fix and flip for retirement.
A Real Estate IRA could be the mobilizer for your home renovation goals. It offers property experts and aspiring restorers the chance to invest in real estate while developing their retirement savings. Here’s a few elements to consider before plunging into fix and flips:
Upgrading Your Real Estate IRA to an IRA LLC
An IRA LLC amplifies your account through the turbo-charged checkbook control, which is essential for real-time investing. It allows you to have the autonomy to execute your everyday transactions without the involvement of your custodian. By saving on transaction fees, you can potentially accrue more towards your retirement.
Watching Out for Unrelated Business Taxable Income (UBTI)
Fix and flips are considered to be a field that typically generates earned income. This can cause your account to be potentially construed as an active trade or business, meaning you’re benefiting from the profits now instead of in retirement.
The IRS usually examines your IRA’S frequency of transactions within a year, the intent of the account holder, and all previous activities performed by your IRA to ensure it has been IRS-compliant. If you repeatedly resell real estate, your account may be subject to UBIT.
Potentially Evading UBIT
You can invest in fix and flip properties with a Real Estate IRA while still abiding by IRS regulations. As it’s permissible to purchase a property and refurbish it without selling, consider completing the fixing aspect and then put your property on the market for rent. Rental income is considered passive income. A general rule of thumb is after 12 months, said property may be viewed as a passive asset by the IRS.
Then, you can choose to resell your real estate for a potentially higher value than when it was originally purchased. Other ways to participate are to behave as a private lender from your Real Estate IRA to an expert fix and flipper, or by employing a UBIT blocker c-corporation. The latter method will still leave you subject to taxes, but they tend to be reduced significantly. It’s best practice to speak with a financial advisor to determine which avenue suits your circumstances best.
Want to learn more about establishing a Real Estate IRA? Our Real Estate IRA Specialists are readily available to take your call. Experience exceptional service for your exciting investment opportunities at Madison Trust.
(800) 323-9203
questions@madisontrust.com
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10 июн 2024
