Commercial Property Investments

Written by Johnny Kitchens
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Investing in commercial properties can be an excellent way to build wealth within an IRA. There are no rules that disallow investing in real estate, either for commercial or residential use. There are rules regarding your inhabiting a real estate asset that is included in your IRA portfolio but, as long as neither you nor your relatives live on the property, it is usually allowed. However, the process for buying real estate with IRA funds can be rather complex.

Investing IRA assets in real estate is not like investing them in stocks. There are more entities involved in the purchase, more paper work to fill out, and more rules to follow. Such investments can easily draw penalties from the IRS if everything is not handled properly. So, if you decide to try and include real estate in your IRA portfolio, you should be absolutely sure of your IRA advisor and double-check all your work.

Once you have the strength in your IRA and the right advisor, the time has come to decide what sort of property you want to purchase. Your IRA can buy a franchise, a piece of timber land, land for a golf course, or beach-front property for condominium development. Your choices are wide open. Just remember that directly owned property must be on US territory. There are loopholes, but be certain of the legality before purchasing foreign land.

Things to Remember when Considering Real Estate in an IRA

If you purchase real estate with your IRA, you will need to be sure all repair and maintenance costs can be paid out of the IRA. All proceeds must go into the IRA and all expenses must come out of it. If you pay out of pocket for an HVAC specialist by mistake, you will probably be penalized heavily. A self-directed IRA gives you much more leeway in choosing investments but it also usually means more work. Fortunately, the rewards can be just as great.


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