Unfortunately, a traditional loan cannot be used for an IRA due to Internal Revenue Code Section 4975 (c)(1)(B). However, a nonrecourse loan can be used in its place instead. So, what exactly is a nonrecourse loan?
A nonrecourse loan is a loan that you don’t personally guarantee. The property purchased with this type of loan is held in the name of the IRA, and all income and expenses associated with the property flow through the IRA. Additionally, the IRA holder cannot use the property for personal use or provide any services related to the property, per IRC Section 4975(c).
Unlike a traditional loan, in a nonrecourse loan, the lender cannot go after the borrower’s personal assets if the loan is defaulted on, and can only seize the property purchased with the loan. Because of the greater risk that the lender takes in this type of loan, the interest rate tends to be slightly higher.
If you’d like to learn more about securing a nonrecourse loan for your IRA, reach out to our team of tax professionals at IRA Financial.
—
Learn more about nonrecourse loans: https://www.irafinancialgroup.com/learn-more/real-estate/nonrecourse-financing-how-does-it-work/
—
Discover more videos by IRA Financial: https://www.youtube.com/user/IRAFinancialGroup/videos?view_as=subscriber
Subscribe to our channel: https://www.youtube.com/user/IRAFinancialGroup?sub_confirmation=1
—
About IRA Financial:
IRA Financial was founded by Adam Bergman, a former tax and ERISA attorney who worked at some of the largest law firms. During his years of practice, he noticed that many of his clients were not even aware that they can use an IRA or 401(k) plan to make alternative asset investments, such as real estate. He created IRA Financial to help educate retirement account holders about the benefits of self-directed retirement plan solutions.
IRA Financial is a retirement account facilitator, document filing, and do-it yourself document service, not a law firm. IRA Financial Group does not provide legal services. No attorney-client relationship exists between Client and IRA Financial, its management, salespersons or IRA Financial’s in-house legal counsel. IRA Financial Group provides IRA retirement facilitation service and CANNOT provide Client with legal, investment, or financial advice. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.
IRA Financial is not engaged in rendering legal, accounting or other professional services. If legal advice or other professional assistance is required, the services of a competent professional person should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association & a Committee of Publishers and Associations.). The scope of Professional Services does not include the costs of any custodian related services.
Learn More: https://www.irafinancialgroup.com/about-us/
Personal Wealth – Three Simple Personal Cash Flow Strategies
Personal cash flow strategies make a night and day difference in your capability to succeed at personal wealth building. These days, a steady paycheck is simply a means of trading hours for dollars and giving the majority of your time towards helping someone else build their dreams. This is why your best course of action when it comes to building a solid investment strategy is self education.
Personal Wealth Building – Powerspending in ActionPersonal wealth building success starts and ends with your spending habits. The wealthiest people in America (the Forbes 400 that is) all have one thing in common when it comes to their financial habits: their spending is always directed towards financial freedom.
Personal Wealth Building – 6 Steps to Guide Your Search For a Partner in Building Personal WealthStarting and expanding your business or investment program may require you to seriously look for a partner that will facilitate a successful and profitable outcome. Finding that partner can be very challenging, must not be taken lightly, and might be the only way to successfully close the deal.
Personal Wealth – A Strategy For Increasing Personal Wealth – A Little Known HabitStrategies for personal wealth are not hard to come by these days. However, I have discovered one habit over the course of my career that makes a key difference between being broke and having financial freedom… and most people are not even considering it.
How to Succeed by Losing EverythingLosing everything is a very scary experience that some of us have to go through in life. Sometimes you have to face this situation more than once, when taking risks is a part of your daily life. Losing everything also means starting new with whatever skills you have, giving yourself an opportunity to focus on what you are good at and what you would love to do.
