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Buy
Your Slice of Paradise Today Using IRA Money Tax-Free -
Now is
the time to turn your dream of retiring overseas into reality via self-directed
IRAs
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Most
of us have the picture of our dream retirement home tucked away in a corner
of our mind. Maybe it’s a 200-year-old cottage with herb-filled gardens
in the south of Spain, or an airy beach-house along the Pacific in Costa
Rica.
Well, it’s
time to dust off that vision and act on it – because desirable overseas
properties are being snapped up at incredible speeds by those desiring
vacation homes or simply wishing to invest in hot real estate. This means
that the charming condo you’ve had your eye on ever since you honeymooned
in some slice of paradise may no longer be there by the time you retire.
Or it will be so exorbitantly priced, it will be untouchable. So the time
to buy is now.
Don’t let a
lack of capital dissuade you from making that purchase. Thanks to specially
structured retirement accounts called “self-directed
IRAs,” you can use your retirement funds before you retire to buy
your retirement home today. And to make the investment, you don’t have
to take a distribution or pay taxes or penalties for using that money.
While you can’t purchase a house that you will live in now, you can buy
it, rent it out and funnel that money tax-deferred back into you IRA.
Or you
can just let the property build equity within your IRA for the time being.
Once you hit retirement age (59 1/2 when it comes to IRAs) you can take
your standard distribution and essentially purchase your dream home from
your IRA.
Sounds
almost too good to be true, doesn’t it? But, surprisingly, such transactions
have been possible with IRAs ever since 1974 when the Employee Retirement
Income Security Act (ERISA) gave account holders the right to personally
direct their retirement monies into investments of their choosing, including
real estate. And because the investment is made on behalf of the retirement
account (just like the IRA investing in stocks and bonds), the acquisition
is made without triggering a taxable event.
Self-directed
IRAs come with an important caveat: You are required by law to avoid any
“self-dealing”
transactions that create a conflict of interest between you (the account’s
fiduciary) and the account itself.
In other words,
every purchase/investment must be made to the exclusive benefit of the
IRA. So the real estate you purchase with your retirement funds must be
used for growing your retirement account.
This is why
leasing out your future retirement home is not only allowable but is smart.
While you may not be able to travel the world now using that rental money,
it will be growing inside your IRA. And you’ll have the reassurance of
knowing that your dream retirement home is waiting for you to take occupancy
when the time is right.
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The
establishing of a self-directed IRA is an involved process, so you’ll want
to work with an “account facilitator” who specializes in these unique account
structures. Account facilitators give the IRA holder checkbook control
of IRA funds, which means you can literally write a check on the spot to
make a purchase or investment. By contrast, traditional “IRA custodians”
allow foreign investments but charge a percentage fee for each transaction
and then must coordinate the transaction.
According to
David Nilssen, president and CEO of account facilitation company Guidant
Financial Group, increasing numbers of people are discovering the
joys of self-directed
IRAs. “The majority of our clients are Baby Boomers who are now
taking a much closer look at their retirement funds and are eager to personally
make those accounts grow faster,” he says. “Buying one’s retirement home
as an IRA investment is particularly popular with our clients. And in light
of today’s housing market woes, foreign real estate investments are growing
hotter by the day.”
The buying
of a retirement home combined with investing in high-demand foreign property
is an ideal combination. Investors might call it a match made in heaven.
And someday – sitting on the front porch of your exotic Belize bungalow
or sprawling Malaysian plantation - you might call it a match made in paradise!
To learn more
about self-directed IRAs or foreign investments, contact Guidant
Financial Group at 888.472.4455 or register for more information at www.guidantfinancial.com.
And yet the
population is falling by a million people a year. Since the year 2000 the
number of schoolchildren has fallen by between 650 thousand and 1.2 million
every year. (This might be linked to reluctance to launch babies into the
chaos under President- Western-backed, incidentally- Yeltsin. They say
that birth rates are now rising.) You can’t regard it as a national crisis
if not every single person in the country owns his own home. You can, though,
if young families live in two-room flats with their parents.
Good indicators
to follow, then, might be the rate of young people who live independently.
As is rises, presumably demand will slacken, especially as the local custom
is not to let apples fall too far from the tree. Politicans’ involvement
in construction could be another one. The Mayor of Moscow’s wife is a big
figure in this field, and while I’m sure that they follow all the rules
on separating their interests, such a high-profile and successful figure’s
continued work in construction must mean that the sector has some growth
left in it.
Sochi And
The Olympics
Everyone was
delighted when the Black Sea resort won the 2014 Winter Olympics, from
locals to developers to any of the numerous Westerners who wrote to me
and then actually bought flats there. Sochi has always been the jewel on
the coast, which is Russia’s prime holiday destination.
If a Russian
hasn’t been there in the summer, then where on earth has he been? And by
2014 it won’t just be Russians but the entire winter sports-loving world,
whoever that might be.
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Is A Good Idea |
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| A hundred
square metres of land in Sochi now costs around three-quarters of a million
dollars, and one such plot has just been sold for a million after an auction
between two big firms. New billion-dollar investments by foreign developers
are being anounced every week. Analysts have reported that prices might
quadruple before the Games, although I don’t know how reliable that report
is. Certainly if prices rise anywhere they’ll rise in Sochi.
It is worth
noting that the local area is actually underdeveloped by Western standards.
Most Russians take their holidays in small self-catering motel-type accomodation
rather than in hotels, and my respectable neighbours took a week’s supply
of instant noodles to sustain themselves. You might take this as a cue
to develop your own small hotel there, or you might buy somewhere in Turkey
or Egypt to cater for the Russians who don’t love instant noodles (after
a week, that includes my neighbours). Buying in the wider area is also
worthwhile, since Krasnodar is one of Russia’s most desirable states, with
good weather and a strong agricultural sector. The South, which also includes
Stavropol and Rostov, is one of the areas where the population is actually
increasing.
Overall, then,
the Russian propety market is at a crossroads. There is money to be made
here, but for the first time in a while there might also be some money
to be lost. Nevertheless, there’s a mortgage market waiting to happen,
an Olympic event, and in spite of what the academics say, a definite openness
to the outside world. |
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