IRAs and Seattle Real Estate
24 Monday Feb 2014
Written by Maria in Homes
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Buying Real Estate in Seattle the Self-Directed IRA Way OR
A Tax-Deferred IRA for Buying Seattle Real Estate OR
Buying Real Estate in Seattle for a Tax-Deferred Investment Account
Buying Seattle real estate has long been one of the preferred ways to save for retirement, so the attraction of merging it with IRA benefits adds a tax dimension. In its own right, buying real estate in Seattle as an investment combines the security of owning a physical asset with the relatively predictable income flow a rental property produces. And if pundits are correct, in 2014 prices are expected to cap last year’s 5% gain by rising a further 3%. Put it all together and it’s clear why some retirement-minded people think that buying real estate in an IRA is an attractive proposition. Neighborhoods doing exceptionally well in Seattle include the Phinney Ridge, Ballard, and Greenlake neighborhoods.
Self-directed Investment Retirement Accounts are largely similar to other IRAs. They allow investments to grow on a tax-deferred basis until retirement time. They differ by allowing a broader range of investment options—qualified by some specific restrictions.
Self-directed IRAs are required to be administered by licensed investment professionals designated as “custodians.” They make sure that all the i’s are dotted and the t’s crossed when the account is funded (either by depositing cash, or moving funds from an existing 401(k) or IRA). They also mind the specifics regarding the types of investments that are allowed. Investments in land, buildings, commercial and residential real estate are typically green-lighted as long as you are not buying real estate that either you, your business, or related parties will ever use.
The rental income and other profits that are earned by a real estate investment must be retained within the IRA account, just as expenses must be paid from it.
Buying real estate in Seattle in a self-directed IRA isn’t always the perfect vehicle to hold all of your real estate investments. The limitations on who can rent a property plus the paperwork requirements mean that it may not be suitable in some scenarios. But when used appropriately, it provides many forward-thinking investors an attractive tax-free retirement investment—your financial advisor’s input will help you make that decision. And for more ideas about buying real estate in Phinney, Ballard or Greenlake as an investment, contact me anytime!