Investing In Foreclosures with IRAs © 2008

By: Colleen K. Rich

Article Word Count: 535 We know that IRAs allow a greater diversity for investing, but did you know that you could use your IRA to invest in foreclosures and that you could do this tax-free. IRAs were created in 1974 as a form of a trust account or savings account to help individuals plan and save for retirement. How does this all work? It's simple actually. You take the funds from your IRA to purchase a foreclosed property. Any renovations or repairers, upkeep, etc., would come from the IRA. This is very beneficial tax wise which I will explain later. If for some reason you don't have enough funds in your IRA for the foreclosure investment, you can consider a nonrecourse loan or a partnership (undivided interest). Then you have a choice, you can either sell the property or keep it as rental income. The profits are rolled back into the IRA to be used towards another investment. This is where the tax benefits come into play. Normally when you sell a property you would pay ‘capital gains taxes’ on the profits, up to 15%. But if you use an IRA and the entire amount, including the profit, is rolled back into the IRA, the contributions are tax free. In order to invest in foreclosures you must have a self-directed IRA. Many ‘investment advisors’ in traditional IRAs or other forms of retirement plans, steer individuals away from self-directed IRAs in hopes of not losing control over your investments. You see in a traditional IRA the investment advisor decides how and where to invest your money, giving you a small portion of the profit, charging outrageous fees, and keeping the majority of the profit for themselves. They do what benefits them, so of course they do not want you to rollover to a self directed IRA or better yet a self-directed Roth IRA! With a self-directed IRA you the owner of the account, has 100% full control over the investments. The trustee or custodian (governed by the Securities and Exchange Commission) merely listens to what you want and acts accordingly to those wishes. The thought of having 100% full control over your investments might seem like a great responsibility, but it is not really that hard. There are companies and teams set up just for this purpose. You only need to decide which IRA works best for you. Colleen K Rich is a real estate investor that partners with both private individuals and lending corporations to finance investment properties. Colleen also works with investment groups that offer services for IRA’s, 401K’s, etc., http://www.Retirement-and-Planning.com so that people all over the country may be educated and helped along in the process of using their IRA’s for investing in real estate. The web site has valuable information and an E-book that can be sent to you upon request. Colleen K Rich can be reached at crich.invest@yahoo.com for further questions on IRA, Private Money, 401(K), or other investing. You can find more articles related to this topic and author online. To find out more on how the power of leverage can work for you visit: http://www.IRA-and-Retirement.com .