The blog explains that the combination of real estate with the tax advantages of retirement accounts such as Self-Directed IRAs is a potentially powerful investment engine. But if people want the tax advantages to stick, they have to follow a few rules.
Charlotte, NC (PRWEB) July 30, 2014
American IRA's latest blog is a cautionary tale to all real estate investors including Self-Directed IRA investors. "Avoiding Real Estate IRA Tax Traps". This blog delves deep into the things that everyone needs to know.
The blog explains that the combination of real estate with the tax advantages of retirement accounts such as Self-Directed IRAs is a potentially powerful investment engine. But if people want the tax advantages to stick, they have to follow a few basic rules to avoid IRS penalties. Running afoul of them even once could cause the IRS to revoke the IRA status, resulting in big tax penalties.
Another important point this blog touches on is that the first thing to understand is the prohibition against self-dealing. That is, using an IRA property for personal benefit, or the benefit of the IRA owner's family. Under the law, an IRA is holding a property in trust for the purpose of contributing to retirement income security. If an IRA holder begins appropriating the property for their own immediate short-term use, that creates a conflict of interest. It also short-circuits the original purpose of the IRA itself: Congress grants tax advantages to IRA accounts because taxpayers have to give up current consumption to contribute to IRAs.
The blog also contains a well put together FAQ section to cover the important points that everyone needs to know.
This blog is a must read for all real estate and Self-Directed IRA investors. Click here to view the full version of this blog.
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