International Real Estate Investments

It is often the case that IRA holders are told of laws concerning owning real estate within IRAs that prohibit the ownership of foreign real estate and strictly limit the ownership of domestic real estate. This is not the entire truth. The laws prohibit such ownership less than do the restrictive plan documents of many major IRA custodians. With the right structure, your IRA can own beach-front property in Costa Rica or a rental villa in Spain.

The key to loosening the restrictions on your IRA involves opening a self-directed IRA and forming a Limited Liability Company. Such a structure allows you to have checkbook control over your IRA rather than having to ask your custodian to write every check (and pay them a fee for every check they write). In addition to freedom in making investment decisions, a self-directed IRA LLC gives you the ability to avoid 90 percent of the fees you might otherwise have to pay.

The structure works somewhat like this. The Limited Liability Company owns the international real estate properties and the IRA owns the LLC. By maintaining checkbook control over the IRA, you are able to pay any expenses associated with the properties directly from cash within the IRA in compliance with the law. Though some may question the legality of such a structure, the courts (whose opinions really matter) have upheld it.

Of Major Concern when Investing Internationally
When you decide you want to start investing in International real estate or other foreign assets, your first concern will (of course) be the potential return on your investment. Following closely behind, however, should be a study of the stability of the country in which you are considering investing. A government that is susceptible to coups and civic strife will not be your best option because you could possibly have all of your assets seized after a hostile takeover.