Invest in Costa Rica real estate with your IRA

In brief: Section 408 of the Internal Revenue Code allows for an IRA, Roth IRA or SEP-IRA to purchase real estate with tax deferred dollars.  To take advantage of this provision, you must work with an independent IRA custodian.   Since you will not have title to the property – the custodian will – it is important to work with an experienced, reputable, trustworthy brokerage company/custodian.  If your IRA doesn’t have sufficient funds available, it may purchase an interest in a property along with other investors.  Any income from your property must be directed to your IRA administrator – you may not directly benefit.  Thus, income, such as rent payments on the property, will be tax free and if your property accumulates cash, it may be used to invest in other properties.  Any expenses, such as association dues, repairs or utilities, must be paid by the custodian.  There are important restrictions.  Personal use of your property is prohibited (e.g. as a residence, vacation property or office).  You are not to benefit from the real estate other than via increased IRA value.  You may not have your IRA buy property that you or your immediate family currently own or previously owned.  (This does not hold true for siblings, however.)  At 59½, you may remove the property from your IRA and have the title placed in your name and put to personal use.  If it has been in an IRA, there may be tax consequences on the appreciated value of the property.  If it has been in a Roth IRA, there will be no tax consequences.  If purchasing real estate with your IRA is an attractive option, contact a reliable brokerage firm for specific information and administration.  If you decide you want to pursue this option, contact Costa Rica Tropical Paradise Properties.  We will work with you to find a property in Costa Rica that is a good investment.

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2 responses to “Invest in Costa Rica real estate with your IRA

  1. Pingback: Mortgage Business » Invest in Costa Rica real estate with your IRA

  2. Interesting tip.

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