Getting Real Estate in Your IRA
BOSTON (CBS.MW) -- Tired of putting your IRA money into the same old investments -- stocks, bonds and mutual funds? Want to invest in something entirely different such as real estate, an asset class perceived to be a top performer and risk reducer, at least over the last decade or so?
Well, truth be told, you can invest your IRA money in just about anything you want to provided you can find a custodian willing to handle the asset and provided you can follow some fairly complex tax laws.
Prohibited transactions, disqualified person, nonrecourse loan, Form 990-T, unrelated business taxable income (UBTI), and unrelated debt financed income (UDFI) tax are just some of the terms with which you may have to become familiar should you put real estate or some other exotic investment in your IRA.
The only investments Uncle Sam doesn't permit in an IRA are life insurance (a life insurance policy on the life of the IRA owner is a definite no-no), collectibles (such as antiques, rugs, stamps and furniture) and capital stock in an "S" corporation.
That means, say the firms who market nontraditional IRAs, you can invest IRA money in private placements, raw land, fishing rights in the State of Alaska, income-producing real estate, foreign real estate, and loans, to name but a few of the not-so traditional choices.
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