News Details (Posted: July 6, 2007):

Several Ways to Invest in Real Estate

Full Description:

The type of property purchased within an IRA will often be determined by the resources available in the IRA, the type of property desired and the market conditions in a specific real estate market. The range of options available includes an outright purchase of the property to leveraging the purchase with a non-recourse loan. Consider self-directed IRAs for investors using one of the following purchase methods:

Real Estate: actually holding the property in the IRA;

Debt-financing: financing the purchase with debt, such as a non-recourse loan;

Mortgage/Deed of Trust: holding a mortgage or deed of trust to the property in the IRA;

Tax Lien: holding a tax lien to the property in the IRA.

Regardless of the type of property purchased, IRA account owners should be aware that there needs to be enough funds in the IRA or income coming into the IRA to take care of annual expenses such as taxes, insurance, repairs, maintenance, etc. In addition, these expenses cannot be paid by the IRA owner outside of the IRA without risking the potential for a taxable distribution of the real estate with corresponding penalties. Realtors should speak with the appropriate tax, and/or legal advisors before making a purchase.

Owning Real Estate in an IRA has its Limitations

Investing IRA funds in real estate is not for every investor and there are certain restrictions and prohibitions which you need to understand before considering this type of investment. The fundamental thing is that the IRA account owner must understand that the property is held by the IRA and that the account owner cannot receive any benefit from the investment. There are severe prohibitions against the IRA account owner (and certain family members) using or being involved with any transaction concerning the property held in the IRA.

Investors are encouraged to consult with their tax and legal advisors to insure that the transaction does not violate any of the prohibited transaction rules. Any transgression of these restrictions could result in dissolution of the tax-advantaged status of the IRA, mandatory distribution of the IRA, and tax and penalties on the distribution.

by Gene Meeker

Millennium Trust Company, LLC does not offer any investment or management advice. Holding alternative assets (generally identified as investments other than stocks, bonds and mutual funds) in IRAs and Solo 401(k)s present unique issues. Investors are encouraged to consult with their tax and/or investment advisor. For more information about the custody of alternative investments, such as real estate, in your IRA or Solo 401(k), visit our website () or call our client services department at 1-800-258-7878.