How to Use IRA funds to buy Real Estate in Belize
Many of our clients have asked us if it’s possible to use IRA funds to buy real estate in Belize. Remax has now partnered with NuView IRA, enabling our clients to purchase real estate as an investment inside their retirement account without incurring penalties or taxes – before their retirement age. Many IRA holders see a big opportunity in Belize and decide to join thousands of NuView clients in adding property to their portfolio
INVESTMENT REAL ESTATE IS A GROWING ASSET CLASS
According to Morgan Stanley, US millionaires view real estate as the top alternative-asset class to own in 2013. Almost 60% of those surveyed expect to add to their real estate investments, whether through a Real Estate Investment Trust (REIT) or direct ownership. Many IRA holders see the same opportunity and decide to join thousands of NuView clients in adding property to their portfolio.
INCREASED EXPOSURE OF BELIZE HAS STIMULATED INVESTORS
The ever increasing amount of tourist arrival in Belize has greatly increased the demand for rental properties, as currently only a few new rental properties came on the market during the past four years.
TYPES OF REAL ESTATE AN IRA CAN HOLD
- Single Family Homes
- A free standing residential building.
- An association of people who cooperate for economic benefit.
- Commercial Property
- Business or land intended to generate a profit.
- Apartment Buildings
- A building consisting of rented self-contained housing units.
- A building consisting of owned self-contained housing units.
- Unimproved Land
- Land without basic required services.
WHY HOLD REAL ESTATE IN AN IRA?
Most investors seek out real estate for certain tax benefits, such as depreciation, long-term capital gains, or they utilize tax deferring exchanges to move from one investment to another. The benefit of holding rental real estate in an IRA is that there are no taxes due as long as the investment has not been distributed to the IRA owner.
All expenses are paid by the IRA, and all income belongs to the IRA. When properties are purchased with cash from an IRA, no taxes are due when rental income is received, or when the property is sold. There is no need to go through the expense and complexity of 1031 tax deferred exchanges, as the entire IRA is tax deferred (tax free within a Roth IRA). While certain investments held within an IRA may be subject to Unrelated Business Income Tax, rental real estate enjoys a special IRS exclusion, allowing all income to return to the IRA tax free. Taxation only will occur when a distribution is taken, but a piece of property may never be taxed if it is owned in a Roth IRA.
FUNDING THE PURCHASE OF REAL ESTATE IN AN IRA
- Cash – the IRA pays cash for the entire property
- Partnering – an IRA can purchase fractional ownership in property
- Financing – IRAs can mortgage real estate with a non-recourse loan
Please note that any property purchased in an IRA must be titled: NuView IRA FBO (For the Benefit Of) Your Name IRA. Once all closing documents are read and approved by the account holder or a designated interested party, NuView can execute the request and send funds to the closing within 48 hours. The IRA now owns the property.
Real Estate Purchase Process
1) Set up and fund a self-directed account with NuView IRA
2) Identify the piece of investment real estate
3) Submit a Purchase Authorization and the contract to NuView
MY IRA OWNS PROPERTY – NOW WHAT?
IRA account-holders invested in rental or leased real estate are encouraged to retain the services of a non-disqualified party to serve as property manager and oversee rental property activities. A property manager may be able to respond to tenant or property emergencies and quickly pay for unexpected expenses. When an IRA owns real estate, the IRA must pay all expenses related to the property. If the IRA owns an undivided interest in the property, then the IRA must pay the pro-rata portion per its undivided interest. The IRA owner can direct NuView to pay the expenses by simply submitting a Payment Authorization Letter along with the invoice to be paid.
WITH A SELF-DIRECTED IRA, THE OPPORTUNITY TO TAKE CONTROL IS SIGNIFICANT.
The IRS does provide rules about IRA holders and other “disqualified persons” as it relates to the usage of the property once purchased. These people, as defined in IRC Section 4975 cannot get a beneficial use from the IRA owned property. Simply stated, they cannot use a vacation home on an interim basis between rentals, regardless of what rent they paid back to the IRA.
The IRA holder gets to make all the decisions not just in the purchase process, but also in hiring the property manager, what to charge for rent, hiring subcontractors to rehab the property, negotiating contracts, or working with the property manager to screen tenants. With a self-directed IRA, the opportunity to take control is significant.
Who really controls your retirement investments?
Many IRA plan administrators, such as brokerage houses, only offer products they sell. Not only do they benefit from the sale of these products, the offerings are typically limited to traditional IRA investments, such as stocks, bonds, and mutual funds. And the uncertainty in today’s financial markets makes it even harder to feel secure about your retirement.
How to use IRA to buy Belize Real Estate — More Choices
With a self-directed IRA, you are allowed greater flexibility in the options available for investments. Under IRS rules, you can use a self-directed IRA to invest in a broad range of alternative investments. With a NuView IRA, you can capitalize on these investment opportunities and still enjoy the great tax advantages an IRA affords.
By self-directing your IRA, you decide what to buy, when to buy it, how long to hold it and when to sell it. You can now be the play-caller for your retirement investments, giving you more control over the outcome of your retirement account, while potentially building wealth and securing your future.
As a self-directed retirement plan administrate NuView allows you to use your IRA to access a investment not prohibited by the IRS. We do not promote or sell any products, so your choices are never limited. And any cash in your accour enjoys full FDIC protection.
As a NuView client, you’ll have access to our certified IRA professionals in our Florida and Ohio offices, as well as our affiliate in Chicago, all of which can provide a wealth of information either in-person or online. These professionals handle all administration of your account, providing accurate, reliable accounting transaction assistance and timely reporting. All you need to do is open your account, fund it, then choose your investments!
Take the first step toward your dream of retirement.