Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

IRA Loan — Investing in Commercial Properties

By Corwin Smith Subscribe to RSS | April 24th 2012 | Views:
loading
 
  



An IRA loan is available when you want to invest in any kind of real estate, including commercial property, through your self-directed IRA, but do not have the entire amount of funds to purchase a property. For example, your self-directed IRA may have 30 percent of the purchase price, but you would need to make up for the other 70 percent through a mortgage. Traditional mortgages do not fit the bill because they put your personal assets at risk via a personal guarantee. Additionally, the IRS prohibits using any IRA assets as collateral for any loan with the exception of real estate.

The solution is using non-recourse financing to take out a loan without making the IRA the collateral. The collateral in this case would be the commercial property you purchase with the loan proceeds, thus limiting the liability to the cash put into the property in the form of the down payment.

Before you invest in commercial property or apply for an IRA loan, you must know what kind of property makes sense to purchase. If your current IRA custodian does not allow investments in real estate, there are many other custodians out there who will allow different kinds of alternative investments. Similarly, there are lenders who are willing to provide an IRA loan to invest in commercial property. Because you are expected to pay at least 30 percent through your IRA savings as down payment, you should invest carefully.

Using an IRA loan, you can invest in office buildings, hotels, farms, residential investment properties, and various other types of commercial properties.

There are many reasons investors consider this the perfect time to buy commercial real estate:

1. Poor performance of the stock market: Real estate investment is an attractive alternative to investing in the stock market, which has not been very stable in recent years.

2. Cheap property: The number of foreclosures across the country has lead to property prices falling drastically, making this a good time to invest in commercial real estate.

3. Good returns: Historically, real estate offers good returns on investment.

Select Carefully

When purchasing commercial property with an IRA loan, you should be careful not to invest in prohibited assets. Otherwise, the IRS will extract a penalty. Examples of this include: you cannot buy real estate from parents, spouses or children through a self-directed IRA. You cannot rent it to them either.

You should also determine if there is any the Unrelated Business Income Tax(UBIT) incurred on the investment. UBIT covers the portion of income based upon the amount of leverage on the property. For example, on a 50% loan to value with an IRA loan, let’s suppose there is $10,000 per year of net rental income on the property. Under UBIT, because the leverage on the asset is 50%, this means 50% of the income generated from the asset would be subjected to this taxation. Some IRS tax regulations are hard to understand; and so it is recommended that you approach a tax expert for help and information.

Investing in commercial properties through an IRA loan is a smart way to build a retirement fund, since all benefits, such as rents, go to the IRA, and take advantage of its tax status. If a loan is needed to make a purchase, talk with a lender who specializes in IRA loans to ensure you obtain the correct loan type to keep you safe from personal liability for the debt.

Corwin Smith - About Author:
For more information regarding IRA Loan, please visit Islandviewmortgage.com

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/loans-articles/ira-loan-investing-in-commercial-properties.htm

Related Loans Articles Subscribe to RSS

Text payday loans- with just a tap on your mobile phone
Published by Cameron White on November 29th 2011 | Loans
Text payday loans are the most beneficial kind of advances for all of the employed people as they ca...
 
1 month loan- Cash advance for salaried people of UK
Published by Martin Bale on July 3rd 2012 | Loans
If you are obtaining quick funds via 1 month loan, you have the right option to solve unexpected fis...
 
Online loans instant approval- Meet any unexpected financial needs today!
Published by Ross Futher on June 5th 2012 | Loans
Once you grab instant funds via online loans instant approval, you are free to utilize the money in ...
 
Cash payday loans: Find an Enduring Way of Cash Issues
Published by Jeckel Hery on May 29th 2012 | Loans
cash payday loans are the handy support of money, which can be enjoyed on short term notice by any o...
 
Fast no credit check loans - Financial solution for bad creditors who need immediate cash
Published by Andrew Stomes on June 12th 2012 | Loans
If you want to grab quick funds in the mid of every month, you can now apply for fast no credit chec...
 
Signature loans no credit check- Perfect loan for bad credit people
Published by Baldwin Will on July 19th 2012 | Loans
If you are getting quick funds via signature loans no credit check, you can easily meet unexpected f...
 
No income verifications loans- Meet your cash needs without income verification
Published by Simar Gun on December 27th 2011 | Loans
No income verifications loans are here to provide you cash assistance without requiring you to furni...
 
Small loans- Tiny fund but useful to meet cash crisis
Published by Conner Abel on July 6th 2012 | Loans
By acquiring quick cash via Small loans, you have the option to meet unexpected cash crisis with eas...
 
Payday loans-Swift Cash According to Your Need
Published by Andrew Jeck on May 14th 2012 | Loans
Payday loans are unsecured loans that are best solution for those who are tenant or homeless and loo...
 
500 fast cash loans- Short term loan with easy repayment
Published by Thomas Symends on November 28th 2011 | Loans
For applying these 500 fast cash loans, you should have a permanent job for more than 5 months....
 
Money loans with bad credit- Get quick cash without any hesitation
Published by Lewis Jasvin on June 29th 2012 | Loans
If you are taking instant funds via money loans with bad credit, you can easily get rid of any kind ...
 
No credit check loans: Appropriate funds to deal with instant financial needs
Published by Alastair Stewart on January 10th 2012 | Loans
No credit check loans can be used by applicants having serious credit problems. The loans are easy t...
 
Application for advance money- Get small amount of funds from this loan!
Published by Benton Nhester on June 8th 2012 | Loans
By acquiring instant funds via advance money loan, you can easily fight against any financial hurdle...
 
Same day loans- Need of money take same day loans
Published by Suzie Parker on January 19th 2012 | Loans
You will get the cash in an easy way through us. Same day loans are basically short term loans and t...
 
Short term installment loans - Quick money for borrowers
Published by Ponting Sarad on May 10th 2012 | Loans
By availing small funds via short term installment loans, you can achieve small financial requiremen...
 
Payday loans UK: It is very easy for everyone to apply for these loans
Published by Moon Thomas on February 14th 2012 | Loans
Payday loans UK is one of the best short term loans for you. You can simply go online and can apply ...
 
Tenant loans: the Best Alternative Deal
Published by Malvin Flec on March 22nd 2012 | Loans
Tenant loans are the best options, which would work you effectively in a hurry mode and they would l...
 
24 month loans: Fast Money with Easy Repayment Process
Published by Alfred Golf on June 11th 2012 | Loans
If you want to go with a reliable deal of finance, it would be none but 24 month loans approved in a...
 
Short term cash loans- Cash Help for Entire Small-Timed Wants
Published by Jeniffer Thomus on December 3rd 2011 | Loans
short term cash loans would come to you according to your need. You would get an approval easily wit...
 
Same day loans online: Good Destination to Stop to Take Money
Published by Andra Nail on May 10th 2012 | Loans
Same day loans online get approved without security and devoid of any credit check and so, get ready...