IRAs Put International Real Estate Investments within Reach

The Spanish real estate market, hit hard by the financial crisis, is now what one analyst calls “a two-speed market.” In many locations, prices have bottomed out and are rising, while other areas may still have room to fall further. When you match attractive prices with the growing interest among many Americans in retiring outside of the U.S., you have a promising opportunity for real estate agents.

When I recently met with real estate delegates from Spain, many did not know that Americans can use their tax-advantaged retirement funds to invest in offshore real estate. They had a lot of questions about how to use Real Estate IRAs as a strategy to grow their business. They definitely saw the potential to sell more to their existing client base of American investors.  

One of the strategies of particular interest to this group was purchasing the property in the IRA, then taking it as a distribution in the future. Because the IRA account holder cannot live in the IRA-owned property, it is typically rented out, creating an income stream for the IRA. When the account holder reaches retirement age, he or she can take the property as a distribution.

If the property was purchased with a Roth IRA, it can be taken as a distribution all at once without any tax penalties. If it were owned in a Traditional IRA, the account holder would pay taxes on the distributed amount. For example, Entrust clients will often purchase beachfront property, rent it out and take incremental distributions until the property is fully in their name.

There is no reason U.S.-based real estate agents shouldn’t take advantage of this same technique to grow their business and stand out from the competition. The Spanish delegates clearly understood the importance of asking every American investor client, “Do you have an IRA?”  Sometimes, you   need to look no further than your database to find more business opportunity—inside or outside the U.S.

Source: By Jason Craig, President of The Entrust Group

For more information, visit www.theentrustgroup.com.