You know that planning for retirement is critical to ensure that you are taken care of when you stop working, but sometimes knowing what to invest in, and how and when to invest, can seem confusing and difficult. One option that many investors consider today is a real estate IRA investment.
When executed correctly, an IRA real estate investment can help you earn more over time than traditional stocks, bonds, and mutual funds, and provide a way to shelter your income from the ups and downs of the stock market. It’s also a great way to diversify your portfolio, and with 1031 exchange services, you can enjoy tax-deferred benefits that could even eliminate the taxes you would otherwise owe from the sale and purchase of real estate.
Most retirement advisors recommend that you diversify your portfolio, and avoid having all your investment in a single place. If you currently hold all of your retirement investments in stocks, bonds, and mutual funds, consider buying IRA real estate as a way to diversify and potentially improve earnings. When you account for the fees and capital gains taxes associated with investing in mutual funds and similar options, real estate IRA investments can often outperform traditional stocks and bonds, and give you more long-term security.
With a traditional real estate sale, the seller must pay capital gains taxes on any income gains that come from that sale, reducing the amount of buying power you have with the income you make on real estate transactions. However, IRS rules allow that you can complete a 1031 exchange to reinvest the money you earn from real estate IRA sales in another like-kind real estate transaction. This tax deferral option allows you to have more money to put into future investments while deferring, or sometimes eliminating, your tax liability.
The 1031 exchange rules allow investors to use IRA real estate investment to buy and sell real estate without paying capital gains taxes, but there are several criteria and rules that must be followed. If you do not follow the criteria, you could be responsible for costly penalties and taxes, which is why it’s a good idea to work with the experts at 1031 Exchange Place. Our advisors can help ensure that your real estate IRA transaction satisfies all the criteria, and even help you find the right properties for your specific investment needs.
Talk to 1031 Exchange Place today to find out whether you should add IRA real estate to your retirement portfolio.