The Real Estate Vibe!
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The Real Estate Vibe!
Episode:173 - Maximizing Wealth With Self-Directed IRA And 1031 Exchanges
Join host Vinki Loomba and guest expert Paul Herbes, Senior Business Development Associate at Equity Institutional Services, as they dive into wealth-building with self-directed IRAs and 1031 exchanges. Paul brings a wealth of knowledge on these often underutilized strategies, sharing how they empower investors to make tax-deferred investments, diversify portfolios, and exercise more control over their retirement funds.
The conversation covers the advantages, risks, and specific investment types ideal for self-directed IRAs, plus actionable insights on leveraging 1031 exchanges to defer taxes and optimize real estate gains.
Key Takeaways:
- Understanding Self-Directed IRAs: Unlike traditional IRAs, self-directed IRAs provide the flexibility to invest in real estate, private equity, and other alternatives outside the stock market. Custodians like Equity Institutional focus on administrative support rather than asset management, enabling a broader range of investment options.
- Why Big Custodians Don’t Offer These Accounts: Institutions like Fidelity or Schwab generally stick to traditional investment menus because of business model differences and fiduciary requirements. A self-directed IRA allows investors the freedom to explore more diverse, high-growth investments.
- 1031 Exchange Essentials: For real estate investors, a 1031 exchange offers a way to defer capital gains taxes by reinvesting proceeds into similar properties, provided you meet specific IRS requirements. Paul breaks down the “45-day rule” for property identification and the “180-day rule” for closing, both crucial timelines for a successful exchange.
- Investment Pitfalls and Compliance: Both self-directed IRAs and 1031 exchanges require compliance with strict rules to avoid taxes and penalties. With IRAs, avoid transactions with “disqualified parties,” and with 1031s, ensure properties are truly held as investments rather than for personal use.
- The Golden Nugget - Estate Planning: Paul emphasizes the tax-saving benefits of 1031 exchanges in estate planning, particularly the stepped-up basis, which can significantly reduce the tax burden for heirs.
🔗 Connect with Paul on LinkedIn: https://www.linkedin.com/in/paul-herbes-2ba01172/
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