Tax Liens and Self-Directed IRAs Equal a Surprising Money-Making Opportunity

Tax liens are far more exciting than the term implies. Go to almost any site that discusses tax liens, and you’ll come across expressions like “undiscovered gem” and “amazing returns.” Tax liens deserve your attention because they are, indeed, full of potential profit.

A tax lien is placed by a government entity (normally a county or municipality) on a property in an effort to recoup unpaid property taxes. Rather than wait for the slow payment of the delinquent taxes, the government sells the tax lien certificate at sale or auction. The government gets its money at the time of the sale, and the buyer gets a great money-making opportunity.

Once the tax lien has been sold, the property owner still has a redemption period in which to make the delinquent payments. If the property owner pays off the debt, the investor holding the lien collects the overdue tax monies plus interest (determined by the state) for the period of time he/she held the lien. If the property owner puts the place up for sale, the lien must be paid before a legal sale takes place.

But if the property owner cannot pay the tax debt within the redemption period, then the state may tack on additional penalties, which the investor receives. Some states will, at that point, allow the investor holding the lien to take over the actual property. Some investors choose to sell it; others use it for rental income.

The purchase of tax lien certificates is a surprisingly safe investment, and the transaction is a rapid one – especially if you have access to a self-directed IRA with checkbook control. When you purchase a tax lien as an investment on behalf of your IRA (tax lien IRA) – and if your account is structured correctly – there are no taxes or penalties for taking a distribution. With a self-directed IRA checkbook in hand, you can make tax lien purchases the moment they become available.

Each state – and often each county within each state – structures the tax lien system differently. Some states require that the buyer be physically present for the auction or sale. So do your homework!

There are some excellent online resources available. You might take a look at www.taxliens.com, which lists the sales/auction information for each state. For info on purchasing tax liens with a self-directed IRA, go to “Tax Liens and Deeds” at http://www.guidantfinancial.com/resources/faq.aspx?sid=55af8bfe-097b-423c-a999-2a04ca9c840b

Wishing you success,
SFPetersen

Living in Paradise: Stop Dreaming and Start Doing Via Self-Directed IRAs

It’s easy to get so caught up in buying and selling real estate that we forget about our own needs. Where will you live after you retire? Will the market be favorable to buyers at the time you need to purchase a place?

Most of us have the picture of our dream retirement home tucked away in a corner of our mind. It’s time to take that vision out and start acting on it – especially if your dream is to live in the country or in resort neighborhoods. These properties are being snapped up quickly by those desiring vacation homes. In fact, according to recent reports, vacation-home sales are beating out the sales of investment homes. This means that the charming condo you’ve had your eye on ever since you honeymooned in some little 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 self-directed IRAs, you can use your retirement funds before you retire to buy your dream retirement home. And to make the investment, you don’t have to take a distribution or pay additional taxes or penalties for using that money. While you can’t purchase a house that you will live in now, you can purchase it and rent it out. Or you can just let it build in equity within your IRA for the time being. Once you hit retirement age, you can then take your standard distribution and essentially purchase your dream home from your IRA.

This is an especially powerful tool if you are investing with a Roth IRA, because, with this model, you can just take a simple distribution and you are on your way to relaxing in your version of paradise.

Renting your investment home for additional revenue is an excellent way to funnel additional money back into your IRA – the same way you would with earnings from stocks and bonds. So, while you can’t travel the world now using that rental money, it will still 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.

An experienced retirement account facilitator, like the Guidant Financial Group (the company I work for) will be able to give you some more details. Meanwhile, here are a couple of sites that touch on real estate IRAs and the purchasing of retirement homes, as well as the popularity of vacation properties:

http://www.guidantfinancial.com/resources/articles/buy_dream_retirement_home.aspx

http://www.realestatejournal.com/buysell/markettrends/20070502-hoak.html

Wishing you success,
SFPetersen

Take Advantage of Foreclosures w/Self-directed IRAs

OK, we know that homes are foreclosing at an incredible rate – and if you haven’t noticed, you should take the time to read the latest report from CNN Money

Needless to say, these foreclosures are devastating for those losing their homes and their good credit. But it does mean an opportunity for investors wishing to purchase property at below-market costs. The thing is: you’ve got to be ready to pounce on that property as soon as it becomes available.

One way that forward-thinking investors can take advantage of spur-of-the-moment purchases is through self-directed IRAs. If structured correctly – and if you have enough money in your retirement account -- you can have checkbook control of your retirement funds. This means you can write a check to buy the foreclosed property on the spot. As long as your real estate investment is done exclusively to benefit your IRA and doesn’t represent a conflict of interest (like you living in the home you buy or renting it out to relatives), you won’t incur taxes or penalties.

There are only a few companies that specialize in structuring a real estate IRA I work for one of them (Guidant Financial Group). Check out the Guidant Financial website for more information.

Wishing you success,

Self-directed Sharon