How to Invest in Tax Deeds Using a Self Directed IRA

Land foreclosures and other types of serious financial and debt problems are happening to everybody in this day and age. Unfortunately, while there are programs in place to help many people in financial trouble, there are not any government programs designed to help developers or landowners in these tough economic times. With unemployment rates constantly on the rise, and the Gross Domestic Product (GDP) dealing with a -5% decline over the last three quarters, it’s hard to know where to turn.
Many people turn to government borrowing, resulting in an average of more than $3 trillion being borrowed each year. This is the highest deficit spending the United States has seen since its inception, and many well respected economists think that the commodities market is soon going to collapse as a result, taking Dow Industrial 30 with it.

Obviously, these harsh facts present serious problems for everyone. Security is lacking and paper investments are getting harder to value. There is a way, however, to find hard assets that can make it through these difficult times and keep your retirement funds safe.

At this point in time, long term investments in hard assets are proving to be the way to go. These assets, such as raw land, are the assets that can survive inflation. Tax deeds, for example, carry with them a serious advantage for the investor. If you have a tax deed, you have not only the security of the land, but also the value of the purchased tax deed for taxes owed to the governmental authority that owns the land. These deeds can then be sold at auction by the governmental authority. If you think this sounds like a good investment for you, you’ll be glad to know that tax deeds are very easy to buy inside of a self directed IRA account.

The first thing you will need to do is to open an account with a self directed IRA administrator. Then you will need to find a trustworthy tax deed auction or look for a company that can manage this process for you and also resell the tax deed properties. An administrator will sign the purchasing contract, and then the IRA owner simply fills out the paperwork and approves various documents. The administrator can then work to fund the property from your IRA, naming the IRA the property owner.

For those with a Roth IRA, all of the money made will go into a retirement account after the property has been sold. This amount is tax free, as are any property gains or further investments. However, there are certain Roth IRA regulations that must be adhered to in order to qualify for this tax exemption. Conversely, with a traditional IRA, all of the gains from the property will be tax deferred until the IRA owner takes distributions. The owner may do this after reaching the age of 59 and a half. The gains may then be used for other investments, without being taxed, until distribution, making all gains completely tax free for the entire time they remain in the IRA. You can then invest all of your money to obtain more gains.

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