Roth IRA Rules--A Powerful Wealth Builder

I am about to show you a very powerful way to build your wealth by investing in real estate. One opportunity that I want to bring to your attention is what is known as a Roth IRA. Here, I am going to discuss the definition of a Roth IRA , Roth IRA rules and how to use the Roth to your advantage to build your real estate investments.

Definition of a IRA

The Individual Retirement Arrangement/Account was introduced in1974 by congress as a way for people to save money for their retirement.The contributions are tax deductible so that may be useful to you. The main advantage of this type of fund is that tax on the profits is not paid until the individual withdraws money from it. This is on retirement when the individual is more than likely to be on a lower tax bracket. In the meantime the money has grown and not been subject to yearly taxes.

Definition of a Roth IRA

First introduced in 1997 by Senator William Roth. The main difference with this type of IRA is that the money contributed is not tax deductible.However it is not taxed when the money is withdrawn.It is important to be aware that this exemption only applies if the individual withdraws the funds after the age of 59 years and six months and has had a Roth account for a minimum of 5 years.

How Does A Roth Provide Massive Profits With Real Estate?

Normally you purchase investment real estate with cash. If you sell the property you have to pay capital gains tax. This can amount to as much as 15% or your profit. Therefore if you made a profit of $10,000.00 you would pay $1,500.00 in capital gains tax. Your profit would end up being $8,500.00.

If you invested the original $10,000.00 back into a Roth you would have the full amount to reinvest again. For example, if you originally invested $30,000.00 into a property and resold it for $40,000.00 you would be able to reinvest the whole amount. Each time you make a profit your IRA amount would have increased enabling you to invest and purchase more. This is a very powerful strategy that offers you a very comfortable lifestyle when you reach retirement age which will hit you before you know it.

Roth IRA Rules

There are several but here I am only going to mention those most relevant to profiting from real estate investment.

#1 You are unable to borrow money from your account.

#2 You cannot use your Roth as security for a loan.

#3 You cannot use your Roth to buy real estate for yourself , your immediate family or descendants. If you purchase a rental property to make profit and rent it out to a stranger that is okay.

#4 You can contribute to your Roth for as long as you like and it is all tax free.

#5 You can own a Roth IRA if you are single or if you file a single tax form and your income is $116.000 per year or less. If you file a joint tax file with your spouse the amount must be $169,000.00 per year or less.

Now that you are aware of the definition of a Roth IRA and the Roth IRA rules you can see the wonderful potential you have in using a Roth to build your financial future using real estate investment as the tool. I have some very exciting information on my website. Please click on the link to learn more.