Have you ever wondered what the difference is between an acceptable retirement and an incredible retirement?

Okay … I’ll give you a hint, and you’ll be glad you did! It starts with an R and ends with eal Estate!

Joking aside … buying real estate within an IRA is not that difficult. There are just a few simple guidelines, and we’ll go over some pretty quickly. Using your IRA for real estate investment purposes can increase your earnings and secure your future, as long as you find the right offers and follow the rules. Let’s get rid of the rules of the road first, and then we’ll get to the right kind of property to look for.

When you buy real estate within an IRA account, you are not supposed to benefit from transactions today … only in the future. Therefore, you cannot benefit directly or indirectly from a purchase that you make. That would be called “trading on your own account” or it would be included in the “Indirect Profits Rule”.

For example … if you use your IRA for real estate investment purposes, you (or other disqualified individuals) cannot live in a home owned by the account … rent a home or office owned by the account … or take a vacation in a property owned by the account. A “disqualified” person, under this rule, would be you, your spouse, your children, your spouses, your grandparents, your parents, your grandchildren, and the custodian of your account … yes … even the family dog. … at least I think so, haha.

Interestingly, brothers, sisters, aunts, and uncles are NOT disqualified, so they might get some current benefits from buying real estate within an IRA that you own, but you may want to keep that information for yourself. Otherwise, the beach house could be reserved for years with no rental income.

Another important rule that applies to using an IRA for real estate transactions is this. It is not necessary to have 100% of the purchase price to make the deal. You can partner with others or get bank financing, which starts to get into the kind of deals you should be looking for.

Also, when you buy real estate within an IRA, you will make the most profit and pay the least taxes if you search for “cash offers” – in other words, those that can be purchased directly with the funds currently in the account. You can take out a mortgage and keep it in your IRA for real estate investment purposes, but of course you will pay interest and be subject to other types of taxes.

Let’s see how a really fast cash deal works. Find a house that is up for auction. You win the bid for $ 40,000. You instruct your custodian to write a check. A year later, after some repairs are made, paid for out of his retirement account funds, he sells the house for $ 80,000. Profits go to the account and are not subject to capital gains or UBIT (unrelated company income tax). That’s one of the biggest advantages of using an IRA for real estate investments. You can keep more of your earnings, because they are not taxable.

On the other hand, if you must have a portion of that $ 40,000 funded, your earnings would pay UBIT. In any financed business, all profits are taxable under UBIT.

There is much more to learn about buying real estate within an IRA. That was just a small detail to start with.

Make no mistake folks … if you’re looking for the best way to blast your retirement account through the roof … real estate is where it is!