FinancialSuccessInstitute.org Announces and Exposes Little Known UBTI Rule Related to Real Estate in an IRA

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FSI today is releasing new information about real estate in an IRA that investors need to fully understand the implication of unrelated business taxable income (UBTI) that can apply to real estate in an IRA.

IRA in real estate

Richard Geller CEO and managing director of Financial Success Institute

Holding real estate in an IRA is a great way for investors to grow wealth far away for the risks of Wall Street.

Richard Geller, CEO and managing director of FinancialSuccessInstitute.org, announced today, "Unrelated Business Taxable Income (UBTI) from holding real estate in an IRA is a subject that self directed IRA custodians seldom inform investors about. The reason this is important is it has serious tax implications for real estate in an IRA. Most investors invest in real estate in an IRA for the purpose of growing earning tax-free until distributions begin at retirement. The Institute is exposing this tax liability so readers and subscribers hold real estate in an IRA correctly or at least have their eyes wide open to the tax consequences."

Geller explains, "There are many ways to buy real estate in an IRA. UBTI is intended to keep a level playing field between 'for profit businesses' and real estate in an IRA that receives special tax treatment. The exact language is found in IRC §§ 512-513. Say there are two competing laundramats in a midsized town. One is operated as a for profit business and the other is held as real estate in an IRA. If the laundromat held as real estate in an IRA isn't subject to business tax it will have a big advantage over the for profit competitor."

Geller continues, "Generally, UBTI applies to an operating business held as real estate in an IRA. The tax rate can be stiff. Like income tax, the scale is graduated. It begins at 15% for the first $2,000 and escalates to 35% on everything above $9,759. For that reason, investors must carefully consider holding an operating business as real estate in an IRA. Generally, profits from real estate in an IRA are not taxable. For instance, an investor buys and rents out a house for several years before selling it for a profit. Under most circumstances, the profits from renting and holding this real estate in an IRA are not taxable and will compound by being reinvested, probably as more real estate in an IRA. When real estate in an IRA is sold at an appreciated value, generally no capital gain tax is due"

Geller points out, "The Institute recently released new information about Real Estate in an IRA for readers to better understand how they can benefit with alternative investments.

Geller concludes, "Holding real estate in an IRA is a great way for investors to grow wealth far away for the risks of Wall Street. The institute doesn't want to discourage investors from having an operating business as real estate in an IRA. For some investors, big profits far out weigh the tax liability from holding an operating business as real estate in an IRA. Readers are encouraged to learn all they can about holding real estate in an IRA at FinancialSuccessInstitute.org."

About FinancialSuccessInstitute.org. The institute is devoted to educating readers and subscribes about investing alternatives and protecting wealth once acquired. Information about how UBTI applies to real estate in an IRA is only a small sample of resources available to subscribers. In addition to UBIT affecting real estate in an IRA, other information readers can access includes investing in real estate, debt settlement, legally minimizing taxes, super trusts, and asset protection.

Disclaimer: Information here and at FinancialSuccessInstitute.org is not legal or professional advice regarding real estate in an IRA or any other retirement account activity. It's intended only as general information sharing. Seek professional assistance regarding your specific circumstances and applicable laws to assure you understand how UBTI affects real estate in an IRA or before taking any other retirement account action.

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Richard Geller