Buy Tax Liens With IRA Money
It’s a little-known fact that tax liens can be purchased with retirement account funds. By self-directing your IRA investments into tax liens, your profits are tax-deferred back into your retirement account. And if you hold a checkbook tied to your “self-directed IRA,” the purchases can be made on the spot. Tax liens are already an underappreciated money-making gem. But they can shine even brighter if acquired through an IRA.
Tax Liens and IRAs: The Perfect Combo
Go to almost any site that discusses tax liens, and you’ll invariably come across expressions like “undiscovered gem” and “amazing returns.” Despite their less than glamorous name, tax liens deserve your attention because they are, indeed, full of potential profit.
The purchase of tax lien certificates is a surprisingly safe investment; it’s ideal for those with limited funds, and the transaction is a rapid one. This latter characteristic makes tax liens perfect investments for those holding self-directed IRAs.
The use of a self-directed IRA is one of the most efficient ways to finance your tax lien purchase. Thanks to the Employee Retirement Income Security Act of 1974 (ERISA), retirement account holders can “self-direct” their account investments into everything from traditional stocks and bonds to more unconventional investments like real estate, hard-money loans, overseas rental properties, and, yes, tax liens.
Some self-directed IRA account structures will allow you to literally carry a checkbook tied to your retirement funds. This is particularly useful when it comes to tax liens: with a self-directed IRA checkbook in hand, you can make tax lien purchases the moment they become available.
These unique self-directed IRAs can be set up by a handful of institutions skilled in these specialized account structures. Many offer free advice on how to utilize such accounts to purchase tax liens. Guidant Financial Group of Bellevue, Wash., one of the industry leaders, offers free phone consultations, and extensive educational materials are available on its website: http://www.guidantfinancial.com.
Avid investor Michael Hepps of Cherry Hills, N.J., recently hired Guidant to structure a self-directed IRA due to the tax advantages it provided. “I’ve been investing in tax liens for awhile now, and I’ve been very happy with my returns,” he says. “I started a self-directed IRA account primarily because the profits on my tax lien investments will now be [tax-deferred].”
Tax-lien investments and self-directed IRAs are a winning combination. Take the time to study and explore this excellent means for growing wealth. Like a jelly-filled donut, tax liens are much more exciting once you sink your teeth into them!