Top 3 Most Popular Investments for September 2017

IRA Financial Trust’s Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS only describes the type of investments that are prohibited, which are very few.   The main advantages of using a Self-Directed IRA to make investments is that you can generate tax-deferred or tax-free gains on investments you know and understand.

The following investments have been the most popular investments for our Self-Directed IRA clients for September 2017:

Cryptocurrency

Even though Bitcoin is labeled as a “cryptocurrency” from a Federal income tax standpoint, Bitcoins and other cryptocurrency are not considered a “currency.”  The IRS tax treatment of virtual currency has created a favorable tax environment for retirement account investors.  In general, when a retirement account generates income or gains from the purchase and sale of a capital asset, such as stocks, mutual funds, real estate, etc., irrespective of whether the gain was short-term (held less than twelve months) or long-term (held greater than twelve months), the retirement account does not pay any tax on the transaction and any tax would be deferred to the future when the retirement account holder taxes a distribution (in the case of a Roth IRA or Roth 401(k) plan no tax would be due if the distribution is qualified).  Hence, using retirement funds to invest in cryptocurrencies, such as Bitcoins, could allow the investor to defer or even eliminate, in the case of a Roth, any tax due from the investment. 

The following cryptocurrency investments have been popular with our Self-Directed IRA clients in the month of September 2017:

  • Bitcoins
  • Ethereum
  • Ethereum Classic

Cryptocurrency investments, such as Bitcoins, are risky and highly volatile.  Any investor interested in learning more about Bitcoins should do their diligence and proceed with caution.

Real Estate

Most people mistakenly believe that their IRA must be invested in bank CDs, the stock market, or mutual funds. Few investors realize that the IRS has always permitted real estate to be held inside IRAs. Investments in real estate with a Self-Directed IRA LLC are fully permissible under IRS rules.  The Internal Revenue Code permits you to engage in almost any type of real estate investment, aside generally from any investment involving a disqualified person.

Income or gains generated by an IRA generate tax-deferred/tax-free profits. Using a Self-Directed IRA LLC to purchase real estate allows the IRA to earn tax-free income/gains and pay taxes at a future date (in the case of a Roth IRA the income/gains are always tax-free), rather than in the year the investment produces income.

The following real estate investments have been popular with our Self-Directed IRA clients in the month of September 2017:

  • Residential homes – for sale and flip
  • Vacation homes for rental
  • Raw land
  • Joint venture investments involving commercial properties
  • Mortgage notes

Hard Money Lending

With IRA Financial Trust’s Self-Directed IRA hard money lending solution, traditional IRA or Roth IRA funds can be used to make secured or unsecured private loans to any third-party who is not a disqualified person. Because most financial institutions continue to require solid credit scores and spend weeks reviewing financial statements, tax returns and business plans, there is a growing need for quick financing for many individuals, small business and investors, especially real estate developers and builders for their real estate projects.

The following hard money lending investments have been popular with our Self-Directed IRA clients in the month of September 2017:

  • Private secured loans to individual non-disqualified individuals
  • Non-secured loans to real estate developers – generally short-term loans
  • Hard money lending investment funds
  • Loans to individuals recovering from hurricane Harvey and Irma

In general, our Self-Directed IRA LLC clients are attracted to the opportunity to gain the ability to make traditional as well as alternative investments, such as real estate, in a tax-efficient manner.

To learn more about Self-Directed IRA investment options, please contact a Self-Directed IRA tax expert at 800-472-1043.