Using a self-directed Roth IRA to buy real estate allows one to eliminate tax on gains whereas a 1031 exchange only differs the tax

IRA Financial Group, the leading provider of “checkbook control” self-directed Roth IRA LLC solutions internal survey showed that in 2015 a growing demand from 1031 exchange real estate investors who are looking to buy real estate and generate tax-free returns. Whereas, a 1031 exchange, also called a like kind exchange, is a swap of one business or investment asset for another. If one comes within a 1031, you will either have no tax or limited tax due at the time of the exchange. Essentially, the investor or owner of a real property can change the form of investment without cashing out or recognizing a capital gain. That allows the investment to continue to grow tax deferred. The gain can be rolled from one piece of investment real estate to another. While there may be profit on each swap, one can avoid tax until the property is sold for cash many years later. Then one would pay the tax on the gain at a long term capital gain rate.

“Using a self-directed Roth IRA to buy real estate allows for tax-free returns in contrast to a 1031 exchange which only defers tax, “ stated Adam Bergman. a tax partner with the IRA Financial Group.

The primary advantage of using a Self Directed Roth IRA LLC to buy real estate is that the transaction can be made by simply writing a check. In addition, all income and gains associated with the self directed Roth IRA LLC would grow tax-free.

IRA Financial Group’s Self-Directed Roth IRA LLC is an IRS approved structure that allows one to use their retirement funds to make purchase real estate tax-free and without custodian consent. The Self-Directed IRA LLC involves the establishment of a limited liability company (“LLC”) that is owned by the Roth IRA (care of the Roth IRA custodian) and managed by the IRA holder or any third-party. As manager of the Roth IRA LLC, the IRA owner will have control over the IRA assets to make traditional as well as non-traditional investments, such as real estate by simply writing a check

Using IRA Financial Group’s self directed Roth IRA LLC with “checkbook control” solution to make real estate transactions quickly without any custodian delay. “By using a “checkbook control” self-directed IRA LLC our clients have been able to make real estate quickly and without any custodian delay,” stated Mr. Bergman. “Using a Roth IRA to buy real estate is a far more tax advantageous than using a 1031 exchange. “ stated Mr. Bergman. “With a self-directed Roth IRA, there is no reason to use a 1031 exchange since all the income and gains will be tax-free,” stated Mr. Bergman.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the markets leading “checkbook control Self Directed IRA Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

www.irafinancialgroup.com or call 800-472-0646.

Mar 09

Internal Revenue Code Section 514 requires debt-financed income to be included in unrelated business taxable income. It was enacted in 1969 for reasons best understood in their historical context.

Under Internal Revenue Code Section 514. if an exempt organization owns “debt-financed property,” some portion of each item of gross income from the property, and a like portion of all related deductions, are included in unrelated business taxable income, whether the income is in the form of rent, interest, gain on disposition of the property, or some other character. Property is debt-financed if it is held for the production of income, its use is not substantially related to the organizations exempt purposes, and there is acquisition indebtedness with respect to the property. The term “acquisition indebtedness” generally includes any liability incurred before, contemporaneously with, or after the acquisition or improvement of the property if it arose because of the acquisition or improvement or if the need for the indebtedness was foreseeable at the time of the acquisition or improvement.

Under Internal Revenue Code Section 514(b)(1), property is “debt-financed property” if it is held to produce income and “acquisition indebtedness” with respect to the property exists at any time during the taxable year (or, in the case of a disposition, at any time during the preceding 12 months). The application of Internal Revenue Code Section § 514 has a wide application. For example, it has been held that securities purchased on margin can be debt-financed property.

Please contact one of our Self Directed IRA Experts at 800-472-0646 for more information.

Mar 06

Leaving your job or thinking of leaving your job and have an IRA or 401(k) qualified retirement plan? Why not use your IRA or 401(k) Plan to invest in yourself instead of a volatile stock market? Why put your hard earned retirement funds in the hands of Wall Street when you can use your 401(k) funds on a business you can run, manage, and even earn a salary from?

With IRA Financial Group’s Business Acquisition structure, a new C Corporation is formed which will adopt a 401(k) Qualified Plan. Your existing retirement funds can then be rolled into the newly adopted 401(k) Plan tax-free. The 401(k) Plan will then purchase the stock of the new corporation. The new corporation will then use those funds to purchase a new business or franchise tax-free!

With the IRS compliant Business Acquisition Structure. you can earn a reasonable salary from your new business or franchise. You can also use your new 401(k) Plan to make high tax-deductible contributions $53,000 ($59,000 if you are over the age of 50) or even borrow up to $50,000 for any purpose.

What does the IRS Say about this?

The Internal revenue Code explicitly permits the purchase of corporate stock by a 401(k) Qualified Plan. The IRS has repeatedly confirmed that the structure is legal but has expressed some concern about the potential for abuse by individuals not being properly advised by tax professionals. For example, the IRS has documented the following instances of abuse when it comes to using retirement funds to invest in a business: (i) employees of the business are not properly informed that a 401(k) qualified plan has been adopted by the business and that they are eligible to participate, (ii) the structure is established with no intention to use for business purpose and the sole purpose for establishment was to get access to the retirement funds without penalty, or (iii) the structure is being used to purchase assets for personal use with the retirement funds.

Therefore, the IRS has stressed that it is imperative that when using IRA or 401(k) funds to establish a new business or finance an existing one, it is important to work with qualified tax professionals who have experience in this area and could make sure the structure is established in full compliance with IRS and ERISA rules and procedures. Work with IRA Financial Group’s in-house tax professionals to help establish your IRS compliant Business Acquisition Solution.

IRA Financial Group ’s Business Acquisition structure is IRS compliant and is the only legal structure that one can use to invest retirement funds into a business they will operate and be employed by. With a self-directed IRA LLC, an individual can invest retirement funds in a private business, but not a business that he or she would be involved in – that would be considered a prohibited transaction pursuant to Internal Revenue Code 4975. While, with a Solo 401K. an individual could only borrow up to $50,000 or 50% of his or her account value whichever is less and use that loan for any purpose, including starting or financing a business. However, if an individual requires more than $50,000 for a business, then the Business Acquisition structure is the only solution that will allow one to use their retirement funds to start or finance a business tax-free and without penalty!

To learn more about the advantages of using a Business Acquisition Structure to start or finance a business using retirement funds, please contact a retirement expert at 800-472-0646.

Mar 05

There is generally no right or wrong answer when t comes to whether an individual should convert his or her IRA funds from a pre-tax self-directed IRA to an after-tax Roth IRA. Clearly the advantage of having a Roth IRA is that once you reach the age of 591/2 and the Roth IRA has been opened at least five years, all income and gains from the Roth IRA will be available via a distribution without tax or penalty. In light of the perception that tax rates will rise in the future, having the ability to generate income and gains without ever paying tax is a really exciting proposition for may people. Of course, the downside of getting your pre-tax IRA to an after-tax Roth IRA, is that you will have to pay tax on the assets being converted, whether they are cash, stock, real estate, etc.

When deciding whether a Roth IRA conversion makes sense for you, below are some important points to consider which will help you make your decision

• Do you have the ability to pay income taxes on the money you convert from your Traditional IRA?
• Based on your income tax bracket, does it make sense to pay the entire tax due in 2015. If you expect your rate to go up, converting may be for you. If you think it will go down, then the opposite holds true.
• Do you anticipate withdrawing Roth IRA funds for personal use within five years of conversion? If so, you may face taxes and penalties if you withdraw within five years of a conversion.

Converting a Traditional self-directed IRA to an after-tax Roth Self-Directed Roth IRA LLC has a number of tax advantages and can offer you multiple tax and investments benefits. The key is weighting the future tax benefits with the current tax hit.

For additional information on the self-directed Roth IRA conversion rules, please contact a retirement tax specialist at 800-472-0646.