Invest with Shannon

Retire Rich: Why Buying Real Estate with an IRA Is a Game Changer with Jason DeBono

Delve into the world of Individual Retirement Accounts (IRAs) with Jason DeBono on this insightful podcast episode. Learn about the different types of IRAs and their key distinctions. Discover how self-directed IRAs empower investors to broaden their investment options, including real estate, syndications, and private loans, while enjoying tax advantages. Explore the implications of holding properties within an IRA, the potential tax benefits, and the factors to consider when deciding between personal holdings and IRA investments. Gain valuable insights into tax strategies and the long-term benefits of paying taxes now.

Listen to the podcast here:

What is an IRA and Its Different Types

Jason delved into the topic of Individual Retirement Accounts (IRAs) and their various types. An IRA is a retirement account created by Congress in the 1970s as a means for individuals to save outside of 401(k) plans. The key difference between a traditional IRA and a self-directed IRA lies in the investment options. While traditional IRAs limit investments to approved financial instruments, self-directed IRAs allow individuals to invest in a broader range of assets, including real estate, syndications, and private loans. This unique feature empowers investors to benefit from tax advantages while maintaining control over their chosen assets.

What Happens to Properties Declared in an IRA

DeBono explored the concept of dividends within an IRA and how they are reinvested. When an IRA owns stocks, any dividends issued by those stocks are returned to the IRA. This principle also applies to real estate investments within a retirement account. If an IRA purchases a property, all the income generated and expenses incurred flow in and out of the IRA. Although this process appears straightforward, it raises questions about the tax implications and potential savings. For example, what are the tax implications when holding a rental property within an IRA for an extended period?

Compelling Reasons to Buy Real Estate Using IRA

Jason discussed the reasons why someone would choose to buy real estate through their IRA rather than holding it personally. The decision depends on individual circumstances, particularly related to taxes. When comparing investments, it’s important to consider the potential returns of the real estate versus the current performance of the IRA. If buying real estate within the IRA can generate a higher return than the existing investments, it may be a favorable choice.

 

Additionally, short-term investments are often better suited for an IRA due to the higher capital gains tax rates. On the other hand, long-term holdings in a personal account allow for depreciation, write-offs, and potential long-term capital gains benefits. Good assets always find a home in an IRA as they provide the advantage of being 100% tax-free. However, the conversation shifts when retirement arrives. If one has been using a Roth IRA, which offers tax-free growth, and accumulated a substantial amount, accessing the funds becomes a challenge. Withdrawals from an IRA are typically restricted and cannot be used for personal expenses or borrowed against.

Pay Taxes Now? or Pay it Later? Which is Much Better?

Shannon and Jason delve into people’s attitudes towards taxes and the popularity split between traditional and Roth contributions to retirement accounts. Many individuals are averse to paying taxes now and prefer to defer them. While Roth contributions have gained popularity in recent years, the mindset of avoiding immediate tax payments persists. However, it is crucial to understand the long-term benefits of paying taxes now and allowing investments to grow. Tax strategies, such as utilizing Roth IRAs and deferred sales trusts, can help minimize tax obligations while maximizing investment opportunities. Balancing the dislike for paying taxes with the desire to build wealth requires understanding the importance of tax efficiency and making informed financial decisions.

 

Important Links:

    About Jason DeBono:

    Jason graduated from the University of Central Florida and has since acquired 17 years of experience in the self-directed IRA industry. He has served as Director of Business Development, Director of Operations, and Vice President for NuView Trust Company – a self-directed custodian with over $2.1 Billion of assets under custody. Now, in his role as President, Jason oversees the day-to-day activities of the company. He is heavily recruited to speak on podcasts and at national events as a subject matter expert in tax-advantaged investing through retirement accounts. Additionally, Jason has provided continuing education to CPAs, Attorneys, and Real Estate professionals and has been a guest speaker at hundreds of investment events and conferences throughout the United States.

    Outside of his role at NuView, Jason serves as Co-founder and Chairman of Chair the Love, a 501(c)(3) organization, which provides wheelchairs and other mobility-related services to those in need.

    He currently resides in Central Florida with his wife, Christina, son, Tyler, and daughter, Delaney.

    Website: NuViewIRA.com

    LinkedIn: Jason DeBono

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