A lot of people are unaware that you can use the funds you currently have in your retirement account to provide you with the capital to break into the tax sale investment business! It’s true! By utilizing a specific type of IRA account you can invest now, while building your retirement nest egg and lowering your tax burden!
Transcript:
Casey Denman here with TaxSaleAcademy.com. In this video, we’re talking about investing with your retirement account.
First off, let’s talk about why. Why should you consider investing in tax sale properties using your retirement account? Well, the primary reason here is because of the income tax benefits that it provides you. You see, when you buy and sell tax sale properties, you’re going to have to pay capital gains tax on the profits or the capital gains for each one of those specific investments.
Now, when you’re paying these taxes right now during your working years, essentially, the assumption is that you’ll pay a higher tax rate. You’ll be in a higher income tax bracket than you would be if you were to pay taxes in your retirement years. So what happens is by using your retirement account to invest in tax sale properties, you’re essentially deferring the taxes on each specific investment until your retirement years, which will hopefully give you a lower income tax bracket so you’ll pay less in capital gains taxes.
Now, let’s talk about the how. How do you invest in tax sale properties using your retirement account? Well, you do this using a self-directed IRA. Now, there’s the old school method of using your IRA to invest in real estate, which is very, very complicated. And thankfully, they’ve come up with a great method we’re about to discuss. But the old method is you basically identify the piece of property. Then you would fill out all sorts of paperwork. You would submit it to your custodian for your IRA account. They would approve that investment. They would send it back to you. And then finally, you would have access to the funds out of your IRA account in order to invest in real estate. This could take two or three weeks.
Unfortunately, when you invest in tax sale properties, you have to be able to buy the property, come up with the funds and everything else a lot of times within, well, two to three minutes. You don’t have two or three weeks to wait.
So fortunately, over the years, financial planners, CPAs and attorneys have developed a new system which is 100% kosher with the IRS, and it is called an IRA-controlled LLC. So basically, your IRA account will form a Limited Liability Company.
Now, a company can’t send the documents and that kind of thing, so it has to appoint an officer. So the person that owns the IRA, whoever is the beneficiary of the IRA account, will also be the officer for the LLC. Now, that officer has something called a “checkbook control.” Which this means – it might be ringing a bell in your head here – is that you have access to the checkbook. You can go to a tax sale auction, decide you want to purchase a property. And as the officer of that LLC, you can sign that check and you can buy that property right then and there.
Of course, there’s all sorts of guidelines and stuff you have to follow. Obviously, it has to be for the benefit of the LLC. It can’t benefit you as a person. It has to benefit the LLC. And in turn, it has to benefit your IRA.
Inside the Tax Sale Academy, we actually have a much more detailed and much more informative webinar on investing in tax sale properties using your retirement account. I also suggest that if you’re considering this, run it by your attorney, your CPA or your financial planner for more information.
If you’d like to see that webinar or if you’d like to learn more information about the very lucrative tax sale business, head on over to my website at TaxSaleAcademy.com. And you can do this by clicking the blue link right here next to my head. Again, it will take you to TheTaxSaleAcademy.com. And once you get there, download your free copy of my e-book, The Tax Sale Blueprint.
Have a great day, folks! Take care! Bye-bye.