- Let's start
with the obvious question first: Is it legal to own offshore investments
(including real estate) inside my IRA?
Absolutely! The regulations for permitted
investments in IRA accounts allow for foreign investments which
includes real estate. The rules allow for your IRA to hold investments
in private company stocks and inv estates partnerships. This
opens up a whole new world of investment opportunities.
- Why hasn't my
broker told me about this?
The reason is very simple, he doesn't want
you to upset his apple cart. The Wall Street Money Machine doesn't
make money when you make your own investment decisions and invest
outside the system. Wall Street's profits from IRA accounts
don't come from collecting $50 annual account service charges
but from the huge management fees on mutual funds and commissions
they collect every year without you even seeing it. How big
is huge? Try this on for size: Let's suppose you have an IRA
account with a $250,000 balance invested in mutual funds from
one of the large brokerage firms. Did you realize you're likely
paying about $3,750 in management fees and trailing commissions...every
year?! Not only are these fees not itemized, you probably didn't
even get a Thank you! note from your smiling, suspender snapping
broker.
- Does it make
sense to include offshore real estate as part of my retirement
investment strategy?
From the strategic level the answer is resounding
Yes! Investing in offshore real estate can have two powerful
benefits to an overall investment strategy. The first is the
powerful risk reducing impact of adding international assets.
The Nobel Prize winning work known as Modern Portfolio Theory
has shown that the portfolio containing up to 40% international
assets actually have a lower risk than being invested 100% in
the U.S. markets in the same mix of assets. The second benefit
is gained by the diversification effect that real estate brings
relative to a stock market only strategy. Of course, how an
investment in a specific investment works out depends on your
research and ability to identify a winner.
- Do I have to
pay any income taxes or penalties when I use my IRA money to make
the purchase?
Not if you use the Omni Asset IRA to make
the investment inside your IRA account! By correctly using this
strategy you avoid paying both income taxes and penalties you
would have paid if you had simply withdrawn
the money. You are using Pre-tax dollars to make your purchase!
- Are there taxes
when my IRA sells the property?
Nope! Because the sale of all securities
inside an IRA account is tax free! The only tax comes when you
finally withdraw the money from your IRA!
- Can I use my
IRA to purchase my personal residence?
You wouldn't want to do this. The IRS has
strict prohibitions against any investment for "personal use".
This could disqualify your entire IRA and trigger severe tax
consequences. These situations are easy to avoid.
- I wish I had
known about this last year! What if I already own a property that
I bought with "after tax dollars" and want to move it to my IRA?
We hear this frequently. You'll want to
be very careful to observe the IRS rules against "self-dealing"
which can also cause disqualification of the IRA. However, sometimes
there are creative solutions to achieve the same result while
observing the regulations.
- Where can I
find out more information?
There are several options:
