A properly-diversified investment portfolio should include real estate in addition to the typical stocks and bonds. Do you know why?
real estate investment
Selling your home? Here’s the income tax facts
Summer is a time when many folks choose to move to a new home. It makes a lot of sense, especially if you have children in school – this way if the move is to a new school district, the children will not have to switch schools during the academic year. Selling your home can have consequences for your income taxes. Recently the IRS issued their Summertime Tax Tip 2015-13, which details ten key tax facts about home sales. The text of the Tip is below: Ten Key Tax Facts about Home Sales In most cases, gains from sales are taxable. But did you know that if you sell your home, you may not have to pay taxes? Here are ten facts to keep in mind if you sell your home this year. Exclusion of Gain. You may be able to exclude part or all of the gain from the sale of […]
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Why Watching the Stock Market Can Make You Sick
I recently read a fascinating article on the correlation between market declines and admission rates to hospitals. The authors point out that almost instantaneously; the effects of a market decline affect mental health such as anxiety. In a nutshell, the authors describe that expectations about the future play a role in investor’s utility (happiness) today. The research in this article can be beneficial on two fronts. One the one hand, the information can be beneficial to advisors in educating their clients that once proper assets allocation for a particular client is achieved there is little to be gained by logging into an account and watching the daily and even hourly fluctuations of the market. And every asset class will fluctuate – which is why we diversify and allocate assets accordingly such as real estate, large cap stock, small cap stocks, commodities, bonds, etc. It’s important to note that at any […]
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UBTI in an IRA
Image via Wikipedia I’ve mentioned before about various types of transactions that are not allowed in your IRA, but we’ve not actually covered the topic of Unrelated Business Taxable Income (UBTI) in your IRA. UBTI isn’t prohibited within an IRA, but it does pose problems and adds a great deal of complexity to your account. Unrelated Business Taxable Income So, what is UBTI anyway? The concept of UBTI pre-dates IRAs – it was originally developed in relation to charitable organizations, trusts, and other tax-exempt entities. The IRS developed this concept to ensure that tax-exempt organizations didn’t have a competitive advantage over taxable organizations, such as for-profit corporations. The way that income is determined to be “unrelated” is by checking these two tests: Is the income from a trade or business that is regularly carried on? Is the trade or business unrelated to the tax-exempt entity’s exercise of the entity’s tax-exempt […]
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Real Estate Investing in Your IRA
From time to time this question comes up: why can’t I use my IRA account to purchase a retirement home? After all, for many folks, the IRA represents a pretty large account, possibly even enough to purchase a retirement home outright – so why not? No Personal Use This is a thorny question, because there are lots of restrictions around this sort of purchase with an IRA account. First of all, you need to understand that you cannot use the real estate personally, if it is owned by your IRA. Specifically, you, your spouse, heirs, and any other linear relatives can not use such a piece of real estate while your IRA owns it. That factor in itself should answer the question for a lot of folks. So, for example you could not – purchase a home in a sunny clime and use it for your own purposes two months […]
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