Why Realtors Need to Know About Self-Directed IRAs
By Joedy Patrick
As more and more people use self-directed Individual Retirement Accounts (IRAs) to invest a portion of their retirement funds into real estate investments (such as vacant land, fixer-uppers, mortgage lending or commercial properties) they will naturally seek advice from their real estate professional.
Self-Directed IRAs empower individuals to pursue investments that are not permitted by most custodians of traditional IRAs. The Realtor who takes the time to acquire basic knowledge about the mechanics of putting a self-directed IRA transaction together will be well poised to make inroads to new investors or expand their current client base.
Though almost any type of real estate can be purchased by an IRA, there are limitations as to how and with whom those transactions may be completed. For example, the sale or exchange of property to or from the IRA may not be to the IRA owner or certain other disqualified persons, unless a prohibited transaction exemption has been obtained through the U.S. Department of Labor. There are also prohibitions concerning any current benefits to prohibited parties that result from buying or selling of property in an IRA.
Though the transactions may be more complicated, the consuming and paper-work intensive, the Realtor that takes the time to learn about self-directed IRAs can reap tremendous rewards.