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to the present decline in the economic situation of the United States and the huge depreciation in the realty market interest rates have dipped greatly creating an interest in IRA real estate investments. This situation has essentially forced investors to look beyond the stock market and more and more people are now looking to invest in real estate. Many people are looking beyond mutual funds and even bonds in order to attain their retirement savings and create a better return of investment. Many people have also realized the fact that they can also use their money invested in their IRAs in order to purchase real estate ranging from raw undeveloped land to even commercial complexes. [link widoczny dla zalogowanych]
According to most IRA experts it is not very wise to use your IRA in order to make real estate investments unless you are very clear about the rules and regulations. Most of the people get in trouble with the IRS due to the fact that they are mostly unaware of these complex rules. Though the investment may provide good return on an investment but it also holds a great disadvantage when compared to the tax advantages provided by the IRA. All things considered if handled very carefully and diligently using your IRA to make real estate investments can be profitable.
While choosing your IRA to make real estate investments you must always consider the pros and cons of all the account types and value them according to your personal preferences in order to make a wise choice. Some of the details for available IRA account types are given below-
Traditional IRA account- this type of IRA allows you to deduct annual contributions [link widoczny dla zalogowanych], set at a value of $3000 and $2500 for people over the age of 50. However if you choose to make your investment from these accounts the money you actually withdraw would be consider as taxable income.
Roth IRA account- this type of account offers you no deduction on your contribution set at $3000 but allows you to withdraw funds without incurring taxes. This type of account is very suitable for making real estate investments and holds those investments for longer. This type of account will be a very wise choice if the property you are investing in has a greater chance of increasing in value with time.
SEP-IRA account- this type of account is usually used by self-employed individuals as well as small companies. This type of account usually allows you to contribute up to 25% or $40 [link widoczny dla zalogowanych],000 whichever is the smaller amount. But for people who have employees working under them they must also take into account the fact that they need to make contributions for each of the employees as well which makes these accounts very suitable for rapid buildup of funds.