Is it possible to make investments without paying taxes?
If you have a little business experience in the real estate industry, you would know that it is not possible to make a profit on land and residences without paying a large chunk on behalf of profits. You may encounter many shady characters who would offer to circumvent loopholes in IRS regulations or tempt you to turn to other schemes that can eventually catch you and end up paying a fine or even going to jail.
A self-directed IRA is probably the only legal way that you can reap the benefits of a healthy housing market. That’s right, you can make tax-deferred investments in land and residences. But, of course, there is no free lunch. The only downside here is that you could use the money generated by investments only after age 59½.
Self-directed IRA is one of the most efficient and safest ways to get comfortable in life after retirement. Even better news is that you won’t be limited to investing in real estate alone with your self-directed IRA retirement account. In fact, unlike other more traditional retirement plans, including the 401k, you can invest in just about anything you want. There are some restrictions set by the IRS like alcohol and collectibles. You should take a look at this list just to be sure before you do your best to invest.
If you feel the need to withdraw your earnings from your self-directed IRA before you turn 59½, you will be responsible for paying taxes on that amount, plus a small penalty. You can get the best value for your investment only if you reach that age. By the time you have all the money at your disposal, you will have too much to handle. You can buy that house by the sea to live your golden years or even go on the vacation that you planned with your partner all your life.
In addition to being able to invest in different types of non-traditional assets tax-free, there are many other advantages to starting a self-directed IRA. You can keep your checkbook in your own pocket, which means that you can make investments whenever you want without the need to contact your custodian or broker for approval of your transactions. As a result, you wouldn’t have to pay any transaction fees either.
Remember to verify that the company or broker you trust your money with is qualified for this job. The best way to do this is by contacting the authorities that handle these matters in your state. Don’t follow your instincts because prevention is better than cure.
