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Interest In Real Estate IRAs Is Bursting At The Seams At American IRA, LLC, A National Provider Of Self Directed IRAs, What’s All The Fuss About

Interest In Real Estate IRAs Is Bursting At The Seams At American IRA, LLC, A National Provider Of Self Directed IRAs, What’s All The Fuss About













Self-Directed IRAs Give You Control of Your Retirement


Lexington, KY (PRWEB) January 20, 2012

Realtor Mag recently reported that optimism is building in the housing market. American IRA is noticing the increased optimism as they are receiving an overwhelming interest in Real Estate IRAs.

Jim Hitt, CEO of American IRA, explains, “Many people are surprised to learn that you can own real estate – not just REIT shares or other stocks, but actual rocks, soil, brick and timber real estate – within your Individual Retirement Arrangement. The IRA vehicle allows you to realize all the advantages of the IRA – tax deductions, no capital gains taxes, deferral of income tax, asset protection, and in some cases, tax-free income – while allowing you to invest in all types of real estate.”

Self-Directed IRAs

The key to using their IRA to invest in real estate is a special vehicle called the ‘self-directed IRA ,’ sometimes called a “real estate IRA.” With these plans, they take over the role normally played by investment companies, such as brokerage companies, mutual fund houses and insurance companies. Instead, they, or their designated representative, take close control of their IRA.

IRS rules don’t allow them to have possession of the assets directly, however. They can’t have a suitcase of stock certificates next to the pile of oily rags by the furnace in their garage and call that their IRA. Instead, they have to have a third party administrator hold the assets on their behalf. When they select our firm as the administrator of their IRA account, however, they have much more flexibility to invest in what they know than they would with a traditional brokerage or insurance company. If they are a mediocre stock picker but a real estate ace, it makes sense for them to stick to their circle of competence. Our firm lays the administrative foundation, and lets them do what they do best – pick real estate – within their IRA.

Prohibited Transaction Rules

The IRS does place some limits on what they are allowed to do with assets in their IRA:

•They cannot use the property for their own benefit. This means they cannot stay in a rental property, even for a night. Many people make the mistake of thinking they can use the property for up to two weeks for their own benefit without losing the tax advantages of the IRA. It is true that tax rules for rental properties do allow them to stay in their own property for up to two weeks. However, this is not true for real estate within an IRA.

•They cannot buy property directly from their IRA, nor sell directly to it. Nor can their designated beneficiary, nor any of ancestors or descendants or any spouse of an ancestor or descendant. For example, their IRA cannot buy or sell directly to their parents, grandparents or children, nor to their spouses. Furthermore, their IRA cannot buy or sell directly to companies or entities they own or control.

•They cannot have the IRA pay them or their company to manage it, nor provide any product or service to it. They also cannot have their IRA do business directly with companies controlled by them or their family members.

•Their IRA cannot do business directly with any of the professionals who service the account. For example, their CPA or financial planner cannot also be the person repairing the roof on a property owned by their IRA.

•They cannot lend money directly to their IRA, nor borrow from it.

•They cannot borrow money directly from their IRA, nor can they use their IRA to lend to their family members , defined as their children, grandchildren, parents or grandparents and any of their spouses or entities they control. However, siblings, aunts, uncles and cousins may be acceptable.

•They cannot pledge their IRA as collateral for a loan – all debt in the IRA must be non-recourse debt. They cannot sign a personal guarantee on a loan within the IRA.

•They cannot commingle personal funds with funds within IRA accounts . They may, however, partner with themselves and others at the time of acquisition of the asset.

But enough of what they can’t do. Here is what they can do, investing in real estate in a self-directed IRA :

•Contrary to popular belief, they can, in fact, borrow money within their IRA to purchase real estate. It has to be non-recourse financing (terms may vary by lender); however, non-recourse financing and unrelated debt income tax (UDIT) will apply. UDIT is only assessed on the percentage of the profit that relates to borrowed funds. For more information on this topic, see our article on leveraged real estate.

•They can collect rental income, tax-deferred and all the income goes into their retirement account.

•They can own real estate within a Roth IRA and collect rental income, tax free.

•They can sell property within the IRA without having to worry about capital gains taxes.

•They can buy raw land.

•They can buy residential or commercial real estate.

•They can diversify by buying real estate in other countries.

•They can use a tax-deferred exchange inside their IRA to defer UDIT tax.

Mr. Hitt concludes, “If you enjoy real estate, you want the chance to use leverage within your IRA account to fund your retirement, and you are up for acting as a landlord, you should consider using a self-directed IRA to own real estate. This is a great opportunity afforded to us by our government; however, you need to be watchful of a few pitfalls. If you are mindful of those pitfalls, this is a phenomenal tool.”

About:

American IRA, LLC was established in 2004 by James C. Hitt in Asheville, NC.

The mission of American IRA is to provide the highest level of customer service in the self directed retirement industry. Mr. Hitt and his team have grown the company to over $ 250 million in assets under administration by educating the public that their self-directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more!

To learn more about American IRA, LLC and self-directed IRAs/self-directed Solo 401(k)s, please contact our office at 1-866-7500-IRA(472).

As a self-directed IRA administrator they are a neutral third party. They do not make any recommendations to any person or entity associated with investments of any type (including financial representatives, investment promoters or companies, or employees, agents or representatives associated with these firms ). They are not responsible for and are not bound by any statements, representations, warranties or agreements made by any such person or entity and do not provide any recommendation on the quality profitability or reputability of any investment, individual or company. The term “they” refers to American IRA, located in Asheville, NC.

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Self Employed Public Liability Insurance And Why It Is Essential

Article by K D Garrow







There are few professions or businesses that can safely do without public liability insurance cover, no matter how small they are. All self employed people should give careful thought to whether they have appropriate cover in place for their business. It should not just be thought of as something you need if you are going out undertaking manual work with inherent risks associated. It really is necessary to all types of business where you either have clients on your business premises (even if it is your home) or if you ever go out to visit clients or work outside your own home. Even for people who work at home it is not something you can do without if you have any direct contact with people either at your place or work, theirs or other premises.

Public liability insurance should be regarded as an essential business expense and included in your business planning and financial planning process. The cost of proper cover will be tiny compared to the cost of facing a claim for damages without any insurance cover in place. What public liability cover is for is protection against your own and your company’s legal responsibility for any damage caused to property or people as a result of your business activity. The cover is relates to incidents involving third parties so does not cover any employees you may have, which is usually dealt with under separate employee liability cover.

There are an enormous range of possible situations where you could need to defend yourself against a claim for damages to people or properties and some of these can be substantial. One of the main costs could be legal costs, which quickly mount up with claims of this sort, no matter how unfounded or unreasonable you think the claims are. They have to be properly defended and your insurance will cover the significant legal costs of doing this.

The only kind of self employed person who could perhaps do without this type of cover is someone who works at home, who never goes out to meet any clients and who never has anyone visit at their home.

The sort of thing that can be covered range from small accidents to property while working on someone else’s premises, to liability for injuries to people who visit you on your own premises. So the most obvious examples would be knocking over something valuable while moving around a client’s house or cutting through a water pipe by accident and causing flood damage. A common one is for people to trip over something of slip on a wet surface and injure themselves. This could be as a result of work you are carrying out inside a client’s property or it could even be a passer by outside or in the street.

Much depends on the nature of your work, and while these are the most obvious examples, there are many such possibilities for almost any type of activity, both on other people’s property and on your own. Some of these very simple and apparently trivial things can actually lead to lasting and serious injuries, which can prove very costly in terms of compensation claims.

The cost of not having adequate cover could be far greater than the cost of premiums, which can be very reasonable. A claim against you when you are uninsured could even damage your business fatally. Most policies will offer a choice of how much cover you want, but a million pounds is usually the minimum. Sounds scary, but that does not mean the premiums will be of that order. The cost should be in relation to the size and business volume of your operation, so for a self employed person running a small business, premiums will not be prohibitive.

Shop around using the internet and check policy conditions carefully to ensure you are being quoted for the cover you really need.



About the Author

Find out where to get the best value public liability quotes. K D Garrow has several websites providing free advice on a range of finance related issues, including young drivers insurance and car insurance for a day.