IRA Real Estate Investing

Tips on Buying Real Estate with your IRA in Pittsburgh – CZ Capital Group

While most people understand that real estate is an investment, many people are taking advantage of the qualified retirement accounts to purchase real estate as an appreciating or revenue-generating instrument like IRAs.

It’s really important to understand the tax implications, legal ramifications, and various other intricacies of purchasing Pittsburgh real estate within your IRA.

So, let’s dive into some tips on buying real estate with your IRA in Pittsburgh PA!

Tips on Buying Real Estate With Your IRA in Pittsburgh

If you don’t have a self-directed type IRA… first off… you’ll need to connect with your trusted financial advisor to find a reputable and low fee self-directed IRA. Or, connect with us and we can direct you to some very good self-directed IRA companies we’ve worked within the past.

Open a Self-Directed IRA

The first step for purchasing investment properties in Pittsburgh within your IRA is to open a “self-directed” IRA. You can do this by visiting a qualified financial advisor or other trusted fiduciary to act as the IRA custodian. A fee-only financial advisor can help you set up this account with minimal hassle, while a commission-based financial advisor may attempt to steer you clear of purchasing tangible assets within your IRA (he or she won’t earn much on the investment).

Types of Properties You Can Buy With Your IRA and Rules

You can own a wide variety of properties within your IRA, including residential, commercial, and industrial structures, as well as unused land. Many savvy investors choose to purchase parking lots, storage unit facilities, and other types of property that require little maintenance but generate steady income.

Your IRA cannot own any home where you live or vacation. Legally, you aren’t even allowed to spend one night on the property. You cannot avoid this restriction by “renting” the property from your IRA, or renting to your spouse, children, grandchildren, parents, or grandparents, nor can you use an IRA to purchase a property from a close family. You could, however, rent property to a sibling, cousin, or friend. A solution that many investors implement is to purchase a home for their IRA, rent it out for income until retirement, then assume residence upon retirement.

How Does Income Work With Real Estate In An IRA?

The income generated in your IRA may not be used for your “personal current benefit.” This means that all income generated by the property must remain within the IRA until you retire. Selling the property will require you to leave all profits within your IRA. Also, property taxes, insurance, improvements, and other costs associated with the property must be paid by the IRA. Failure to comply with these regulations could disqualify your IRA, subjecting you to income taxes on the entire value of the property, plus a 10% early distribution penalty.

It’s important the all distribution rules associated with an IRA (or Roth IRA) including taxation, required minimum distributions, beneficiaries, and other factors do not change when using a self-directed IRA to purchase a property. There can be a huge upside to real estate in your IRA, but it’s best to know exactly what’s in store.

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Self Directed IRA For Real Estate – What Are the Rules in Pittsburgh?

We get asked questions all of the time from savvy investors who we work with here at CZ Capital Group.

Most of the questions surround buying investment properties in Pittsburgh PA… which we, of course, know a lot about.

But one part of buying an investment property / rental property is how are you going to pay for it?

And, can I use my IRA to buy local investment properties?

Self Directed IRAs for Real Estate – Can You Use Them To Buy Pittsburgh Rental Properties?

First off, IRA refers to an individual retirement account.

IRAs traditionally hold investments like stocks, mutual funds, etc…. mainly because that’s the mainstream way most people save for retirement.

But, since you’re reading this article you know that real estate can be a GREAT option for increasing your wealth.

But… how can you use your IRA to grow your retirement fund, earn the tax benefits of the IRA, and the benefits of Pittsburgh real estate too?

Though the self-directed ira real estate is increasingly being taken up by investors, you should do certain things to ensure that the law is being followed to the letter when you use your IRA for local PA real estate investments.

Some Simple SDIRA (Self Directed IRA) for Real Estate Rules To Follow

No “Self Dealing”

If you’re using your self-directed ira for real estate in Pittsburgh you are forbidden from self-dealing.

Self-dealing is outlawed with your SD IRA in the sense that it can’t purchase land or property (both commercial and residential) for the owner or any family member to reside in.

It is also prohibited from selling property or land to the owner of the IRA or family members in the process of business dealings in Pittsburgh.

The Process of Buying Pittsburgh with Your Self Directed IRA

There are very specific rules that you have to follow if you’re using your SD IRA to pick up Pittsburgh PA properties.

After you provide the correct documentation for purchasing the local Pittsburgh investment property to the self-directed ira custodian, the custodian will start the purchasing process on behalf of the self-directed ira real estate.

All the costs related to the purchase of the property are channeled through the self-directed ira for real estate; hence it’s vital that it must have enough cash to pay for these costs.

Failure of this will lead to the forfeiture of tax benefits and the penalties to be paid by the IRA.

Choose The Type Of Self Directed IRA Wisely To Use It For Your Real Estate Investments

There are lots of options when it comes to self-directed IRAs.

Not all SD IRA’s allow you to buy real estate in them… so you’ll have to do your research to find the best SD IRA custodians so you can start buying Pittsburgh properties in it.

NOTE: We’ve worked with many SD IRA companies and we’ve found the best providers who are very experienced in working with real estate within an IRA. Call us today at (412) 529-1783 or email us through our Contact page and we can give you information on the best SD IRA companies for Pittsburgh PA real estate investments.

Checkbook Control

Some Self Directed IRAs have more restrictions than others.

As an example… some of them require that you submit the investment details to them… they analyze it… then they send the cash from the account.

But there are accounts that give you what's called “checkbook control”.

An investor in self-directed ira for real estate with control of the checkbook is able to make purchases by just writing checks rather than having to go through the lengthy process of having to pass it through the custodian first. This lets you take advantage of deals that you have to act quickly on (which many of our local Pittsburgh investment properties go fast).

Your Role In The Investment After The SD IRA Purchases It

You as the owner of the self-directed IRA account has the ability to really manage the investment in a hands-on manner. The roles include: receiving checks for rent payments from tenants, managing the properties, etc… everything you’d normally do as the owner of an investment property.

Of course, there are more guidelines that you have to follow if you plan on using your self directed IRA for real estate in Pittsburgh… so make sure you do your homework and do these two things immediately:

1. Find a great self-directed IRA company/custodian: This is the first step. You have to get this in place before you even think about purchasing anything through your IRA. If your current IRA holder won’t allow you to buy and hold real estate in it… call us at (412) 529-1783 and we’ll refer you to the best local custodians… and they’ll be able to help you transfer your current IRA to your new self directed IRA.
2. Find a couple of great Pittsburgh investment property experts, like us at CZ Capital Group.  One of the best ways to get great properties here in Pittsburgh PA is by working with a professional investment property company like ours. We find high discount properties (both single-family and multi-family) all around Pittsburgh and sell them to investors like you at discounts so you can turn them into solid profitable rental properties.  Join our Preferred Buyers List Here >>

We Can Help You Get Rolling With Your SD IRA For Real Estate.

Just reach out to us at the phone number below or send us an email… and we’ll walk you through the process, point you to the best SD IRA resources locally in Pittsburgh, and get you on our Preferred Investment Property buyers list.

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How to Use Your IRA to Buy Real Estate in Pittsburgh – Part 2

Putting your money into an IRA or similar investment vehicle can be a great idea.

Everybody knows that.

But with taxes on their way up, it might be an even better idea to create a self-directed IRA, which will allow you to widen your investment options to include local Pittsburgh investment real estate in order to defer your taxes and end up earning a better rate of return in the long run.

If you are considering this option, it might be a good idea to determine if it’s a good move for you and if it is, here’s how to use your IRA to buy real estate in Pittsburgh.

A Few Quick SD IRA for Real Estate Facts

• In order to use your IRA to buy Pittsburgh real estate, that property must be a business, not a personal home, a second home, or a rental (but there is a simple way to put rental properties into an SD IRA… below)
• The property you buy must not be something you already own
• It must also be a purchase directly into the IRA

How to Use Your IRA to Buy Real Estate in Pittsburgh

It is possible to buy a rental property with an IRA, but you must open a custodial account then transfer money into it. It’s a simple process that we can help you out with. Just give us a call at (412) 529-1783 and we can walk you through the process.

There are many rules associated with this type of transaction, so be sure you understand and agree to them before you buy them. It is also possible to buy a home for the purpose of “flipping” it, but only if you are in the flipping business.

Furthermore, there is a limit to the number of flipped properties you can purchase in one year in Pittsburgh with your self directed IRA.

Again, the best course of action is to determine the rules for the process to make sure you can live with them.

SD IRA Investing Limits

The rules that govern these types of investments do not allow a traditional mortgage with an IRA.

Instead, you need to have enough money in your IRA to make the purchase. There are costs associated with administering the IRA, so you must make sure that your IRA has enough money in it to cover those expenses too.

Again, if you don’t already have a great self-directed IRA custodian… reach out to us and we can connect you with the ones we know of who are very real estate friendly. Just give us a call at (412) 529-1783 or shoot us an email through our Contact form and say “I’m looking for SD IRA resources for buying Pittsburgh investment properties”… and we’ll get back to you right away.

Basic Rules of Investing (even with real estate)

There are many rules in investing that can help you determine a good purchase from a bad one. One of the most important is to diversify your portfolio.

As tempting as a real estate purchase might be in Pittsburgh, it’s a good idea to follow this advice when using your IRA to make a purchase. Just as is the case with any big investment, it’s always a good idea to check with a qualified financial adviser before you make a purchase to get an independent view of the long term as well as the short term outlook.

In the end, using your IRA to invest in local Pittsburgh PA investment properties can be a great route.

It helps you grow your portfolio using real estate with the tax benefits of the IRA.

If you’re looking for investment properties here in Pittsburgh join our CZ Capital Group Preferred Property Buyers List through the link below.

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