Bret’s IRA executed the contract with the seller to purchase the property at the agreed price, the property was then sold to the former neighbor moving back to the community.
The difference between what Bret’s IRA paid for the property and what it was sold for resulted in a $21,000 gain.
Personal and Community ROI
Bret’s IRA investment was unique and structured based on his years of experience and education in real estate investing. He credits the flexibility of using his self-directed IRA.
Besides the positive impact on his retirement account, Bret’s transaction also benefits the seller and the community.
He opened his self-directed account after learning this was possible from other investors and has been happy with the decision.
“I like the idea of being a steward of my own retirement and future.”
[Related: 20+ Real Estate Investment Strategies Working in an IRA]
1What investments can I make using a self-directed IRA?
With a self-directed IRA, your investments are up to you, within the bounds of the IRS rules and guidelines. The IRS does not provide guidance on what investment types are permitted, but dictates only what is NOT permitted. Examples of prohibited IRA investments include collectible (such as artwork, stamps, rugs, antiques and gems), certain coins and life insurance. See IRS Publication 590 for more information about prohibited investments.
2Can my IRA purchase real estate that my corporation, partnership or LLC owns?
No. This is considered a prohibited transaction (see IRC 4975).
3Can I use funds from my IRA to renovate property to sell it at a higher price?
Yes. However, your IRA must pay all expenses associated with a property that it owns, including renovations. Further, all proceeds from the sale of the renovated property must be deposited into your IRA.
Case studies are provided for illustrative purposes only. Past performance is not indicative of future results. Investing involves risk including possible loss of principal. Information included in the above case study was provided by the investor and included with permission. Equity Trust Company does not independently verify all information provided by third parties.
