Using Your IRA for Foreign Real Estate Investment
LiveTheLifeinEcuador | July 31, 2015
For many people, squirreling cash away in their IRA is the best option when it comes to saving for retirement and reducing taxable income. Sadly, our recent economic climate has affected our IRAs in more ways than one, leading to insignificant growth and low returns – which leaves many wondering if there are ways to make their IRAs perform better.
There is, thankfully – and though it will require more effort and initiative from your end, you could very well end up reaping tons of benefits.
Investing in Foreign Real Estate
Though many hesitate to invest in real estate due to the generally sub par performance of the country’s housing market in recent years, it’s still an excellent option if you’re looking for a quality long-term investment.
Many people are unaware of the fact that real estate can be used as a valid holding for IRAs (self-directed). The best part is, it applies to properties both in the US and overseas, and includes nearly all property types: commercial properties, rental properties, raw land, farm land, property renovations, and more.
Due to lower costs for both houses and land, investing in international real estate is a great way to maximize investment returns. Compared to the US, properties on foreign soil also have significantly fewer restrictions and regulations, paving the way for more profit.
Another advantage that comes with investing in foreign real estate is added savings. Compared to buying property in the US, you can save a significant amount due to extremely low property taxes and more affordable utility and maintenance fees.
Ecuador, for example, has one of the lowest property tax rates in South America – it normally won’t exceed $200 a year, even if the property is of considerable size. Property owners age 65 and over get the added benefit of a 50% discount on property taxes. As for utilities, it hardly goes over $100 per month, including internet.
Investing in another country allows for more lucrative opportunities and better options as well. You can purchase raw land and convert it into a resort or a tourist attraction, renovate or make improvements on a property and rent it out, or buy a vacation home which you can put up for rent before you actually retire. No matter how you look at it, the fewer restrictions in foreign countries mean less stress and headaches, giving you more time to enjoy your retirement years.
The best part about investing in real estate overseas is once you rent out your property, all of the proceeds from your investment go back into your IRA account, completely tax-free.