Costa Rica Real Estate in Your IRA – Tapping into your Personal Land Bank

Costa Rica Real Estate in Your IRA – Tapping into your Personal Land Bank

You have probably heard by now – some individuals are investing their IRAs and rolled-over 401K plans into real estate that they personally select.

What you may not realize is how few of the general public know and understand the power of self-directing their own IRA.

The federal government recently released their statistics on IRAs – and the finding were stunning. Over four trillion dollars are in IRAs and most of that money is invested in Stocks, Bonds and Mutual Funds – riding with the ups and downs of the stock market. Yet less than ½ of one percent of IRA holders have self-directed IRAs.

What does that mean to you as an investor? That money can be put to work in real estate of all types. Yes – an IRA holder can lend his IRA, or borrow from someone else’s IRA (as long as they are not disqualified). You may own investment property in your IRA both in the US and in many foreign countries – including Costa Rica.

All you need to get started in using your IRA for real estate investing is a third party administrator such as the Entrust Group (the IRS does not allow you to hold and transact with your own account), some IRA funds, and your own real estate investment ideas.

Once your account is open and funded, you simply direct your administrator to buy or sell property in the name of your IRA. The best part is that – just as in any IRAs, the gains are not taxed until you withdraw the funds. Thus you don’t need to worry about capital gains, hold periods, 1031 exchanges or any other tax consequences deriving from the transaction.

All types of real estate qualify to be held in an IRA – and clients are buying just about everything: Single family homes, apartment buildings (many with LLCs), condos, pre-construction and plain raw land. Keep in mind, once you IRA purchases property, all the rental proceeds belong to your IRA, and all expenses must be paid from your IRA. Should the property later be sold, all the funds are deposited into your IRA.

Just remember, if you direct your IRA to buy a property, you cannot get personal benefit from it, nor can members of your immediate family. For example, you cannot buy a beachside condo with your IRA, then stay in it once a year for your vacation.

As a real estate investor, you may have considerable advantage over the general public. You understand the power of real estate, and you are surrounded by experts that can assist you in all aspects of your investments including acquisition, rental, rehab and sale. You are undoubtedly motivated to act, and now, with your IRA or someone else’s IRA you have access to the funds necessary to get going.

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Written by Glen Mather of Entrust Administration Services, which provides self-directed administration for clients in 24 states, Canada and the Virgin Islands. (877) 259-3256

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.