Monday, March 5, 2012

Book Review: Leverage Your IRA by Matthew B. Allen

The folks at Northern American Savings Bank have written a very good book on how to use a self-directed IRA to invest directly in real estate.  They are probably the leaders in non-recourse lending to IRAs so they are definitely the experts in this complicated area. 

The nice thing is that they make this rather daunting topic approachable.   They first explain how it is that you can use IRA money to invest directly in real estate.  Most people are unaware of that.  

They next explain the tax implications of buying property through your IRA.  Where it gets tricky is if you use a mortgage to purchase a property in addition to using some cash from your IRA.  Then you have to pay taxes because of the unrelated debt-financed income (UDFI).  The tax you have to pay is the Unrelated Business Income Tax (UBIT).  They simplify the calculation of this tax as much as humanly possible.  

The most important contribution of the book is to show you another way to finance real estate purchases in a tax deferred or tax free environment.  Leveraging your IRA does have significant benefits and it should be a part of your retirement planning.  


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