4 Tips for Holding Real Estate Offshore With Your IRA

One of the most popular investments held by self-directed IRAs and other similar retirement accounts is real estate. Many investors are unaware that it is permitted to hold offshore real estate in a self-directed IRA. Individuals seeking greater diversification can take advantage of international properties and incorporate this asset into their investment strategies. This type of alternative investment can be considered solid means of storing value for the long-term.

Familiarity with Rules and Regulations

Before purchasing real estate in another country, an investor must be familiar with the rules and regulations of the nation. Investors should also familiarize with the economic and political climate. One major risk that must be accounted for is the stability of the nation's government as well as other socioeconomic factors.

Research Reporting Requirements

Before using a retirement account to invest in offshore real estate, an individual should research the reporting requirements that go along with having offshore accounts to properly complie with IRA regulations.

Understand Self-Dealing Regulations

Investors who want to use their self-directed IRAs to purchase foreign assets need to be aware of self-dealing regulations. The IRS prevents investors from using accounts to purchase property already owned by the individual or other disqualified persons. Investors, along with associated disqualified persons, whose retirement accounts own offshore real estate cannot visit the property as a holiday destination. Once the minimum age requirement is reached for distributions, a foreign property can be made as an "in-kind" distribution to the investor. At this point, the individual can use it as a second home or vacation house.

Consult with Legal Advisors

With all the options that are available to investors who use self-directed IRAs, investors are responsible for making choices that are best for them. It is recommended that individuals exploring self-directed investment offerings consult with their tax and legal advisors.