The Modern Day IRA: Sarasota Real Estate Investing

Real Estate Investing in SarasotaMost Americans know that you can invest the money in your IRA account in bonds, stocks and mutual funds. What most people do not know is that you can use your IRA to acquire real property. Investmenting in Sarasota real estate is associated with two advantages; appreciation and rental income. However, several procedural conditions must be fulfilled before you can acquire property using your IRA. There are also numerous limitations on the kind of property that you can obtain using your IRA. Below are a few pointers that can help you during your investment. 

Finding a good custodian

The first step towards acquiring real property using your IRA is finding a capable custodian. In most cases, traditional IRA custodians are banks and brokerage firms that do not directly deal with real estate. They thus limit your investment to the products they usually offer, such as bonds and stocks. You must find an acceptable investor who handles self-directed IRAs. The easiest way to find a good custodian is by searching online for a self-directed IRA trustee. Most of these administrators charge a fee for their services. It is important to find a custodian who charges a reasonable fee and fulfills all your investment needs. After creating an IRA custodial account, you can now start purchasing some real estate by transferring money from an existing IRA account.

Types of properties

There are limitations to the property you can buy using your IRA. It must be a commercial or business property, and not a residential home, occasional rent or a second house. On the other hand, it must be property not currently owned by you, your spouse or something that a family member already owns. Another limitation is that you cannot use or live in the property that you obtain using your IRA. However, you are allowed to use the property after retirement and disbursement. A self-directed IRA allows you to buy and sell Sarasota homes, commonly known as flipping. However, the number of transactions you can carry out every year is limited. Profits made from such deals are tax-free, enabling your IRA to continue growing. 

Investment concerns

It is important to understand that you must have sufficient cash in your IRA account to purchase property because you cannot qualify for a traditional mortgage loan. Remember that you will be paying the custodian a certain fee to administer your self-directed account. Depreciation or losses made from any property obtained using an IRA account cannot be written off, making it impossible to get those traditional tax savings associated with rental properties. Failure to comply with any of the rules can lead to tax penalties or completely destroy your IRA. 

Pooling your resources

The beauty with using your IRA is that you can pool your resources with other investors and use it to obtain property. Two families each with an IRA of $100,000 can come together and buy real estate property worth $200,000. All they need is a joint venture agreement that stipulates the ownership, maintenance and sale to prevent future conflicts.


If you have any questions about purchasing Sarasota real estate with your IRA or about the buying or selling process, we'd love to help. Please contact Key Solutions Real Estate Group, or call (941) 894-1255.

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