International Real Estate Investments

Written by Johnny Kitchens
Bookmark and Share

It is often the case that when people first start to think about investing in real estate, they rarely think about properties much further than their own cities. This is not necessarily a bad thing because when starting to invest, you should start with what you know. However, this tendency can very often create a narrow view of the overall real estate market. This overall view entails crossing county, state, and international boundaries.

The basic rules governing IRA investing say that real estate owned by an IRA must be on United States soil (including protectorates). However, an IRA can own foreign land indirectly. IRAs are not prohibited from owning stock in foreign companies. This means that the IRA can own 100 percent of the stock of the foreign company that owns the land in question. The structure of such a deal can be incredibly complex and the means of paying expenses on such property only adds to the complexity.

Structuring international real estate deals within the confines of an IRA is beyond the capabilities of most investors--especially those without a strong knowledge of real estate transactions in general. It is also often beyond the scope of experience of most IRA custodians, trustees, and advisors. If you are interested in holding international real estate within your IRA or Roth IRA, you should absolutely seek out an advisor capable of guiding you through the process.

Stepping outside the Bounds of IRA Laws

If you step outside of the bounds governing IRA investing, you can lose your IRA altogether. In some instances, breaking the rules means that all of the assets in your IRA become taxable at regular rates. This means your IRA is no more protected from taxation than any other investment account. When you start to participate in more complex IRA investments, it becomes even more important to do your homework. You must read and understand the rules and your advisor should work closely with you to double-check all of your findings.


Bookmark and Share