Craig Nosler, CRS, ABR
Associate Broker / Real Estate Professional
CRAIG NOSLER, CRS, AB, ABR | RE/MAX INTEGRITY | 371 NE GILMAN BLVD., ISSAQUAH, WA. 98027 | DIRECT - 425.765.5588 OFFICE - 425.391.1997
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Retirement Fund: Stocks, Bonds and Real Estate?
Did you know that you can invest your retirement funds into real estate? Now you can use your IRA, SEP IRA, or 401(k) rollover monies to purchase the real estate you want today and own it outright outside of your IRA. This can be done in two very different ways.
The first way is for the real estate to be owned by the IRA. This requires moving your IRA/ 401k rollover to a self directed IRA custodian that allows real estate. There are restrictions and ultimately income and estate taxes will need to be paid.
The second way real estate can be purchased is outside an IRA. You can own your dream home, investment property, oceanfront property, beach house, commercial property, mountain home, ski chalet, a vacation home, or condo on the lake. The choice is up to you! Youll be able to occupy the property you purchase as well.
Consult with your tax advisor for details on these two methods.
IRS Help: Free income and tax-free exchanges
When you sell real estate it usually creates a taxable event as you owe capital gains tax on the increase in value over your purchase price. But there are two methods around this.
In the case of your principal residence, you can keep the profit without owing any taxes. The limitation is that you must have owned and occupied the property as your principal residence for at least two years during the previous five years. The exemption is $250,000 for an individual and $500,000 for a married couple filing a joint tax return.
The other thing the IRS allows you to do is to defer taxes on the sale of investment property by reinvesting that money into one or more other like-kind properties. This is known as a IRC 1031 Exchange. This is limited to investment types of property and is not allowed for your principal residence or personal use property.
Second Home or Vacation Property
We all dream about that day we retire and can buy that place on the beach, mountain, golf coursewhere ever your personal dream may be. Depending on the location, you may consider buying that home sooner than later. One of my colleagues started with his first dream vacation home in Cannon Beach, OR and quickly found that its also a great income property. He's foregoing any additional residential rental properties to focus on just the vacation rental market and doing very well.
Not every location is perfect fit for this type of investment, so do your research first. If your looking beyond Snoqualmie Pass or other local areas, let me know and I can refer you to a qualified agent in the location of your choice.
Multi-Unit Residential
Multi-Unit investments fall into two classes - those with up to four-units and those with five or more.
Up to four-units, these investment properties can be financed with a conventional residential loan as well as FHA and VA loans. These are really a prime investment for someone doing owner occupancy of one of the units. Because of the high demand for this type of property, the per-unit price tends to be higher.
Five-units and up moves into the commercial property arena. Loans for these types of investments are driven by the financials of the building rather than your personal income. This is a great place to invest as syndicate of investors - organizing as an LLC, corporation, partnership, etc. - depending on the tax and liability considerations involved.
Foreclosures and HUD Investments
There are multiple gurus out there touting the get rich quick method of real estate through foreclosures and HUD properties. You can make money on these types of properties - but it's by buying smart and realizing that you will make your money over time - not over night.
If your interested in these types of properties, contact me for assistance in locating, researching and acquiring these types of properties.
