If you’re looking to put your money to work, a Real Estate IRA is one of the most exciting ways to do it. With the stock market still tumbling, and the rental market looking like it’s on its way up, this is an excellent time to scoop up properties that will pass the cash flow test immediately.
Investing Indirectly
With the stock market stumbling and inventory tight, there is no better time to invest in a Real Estate IRA. It’s also a great time to consider investing in tax credit backed financial products such as the PTC or ITC. The PTC is 2.6 cents per kilowatt hour of electricity generated from “qualified energy resources” at a “qualified facility” and sold to an unrelated party over the course of 10 years, while the ITC is available to tax exempt entities such as federal, state and local governments, nonprofit organizations, and certain farmers’ cooperatives.
Investing In Stocks
During the stock market’s recent plunge, many of us were wondering where to park our money during the recession. The economy is slowly improving, but it’s not clear how long the recovery will take. In the meantime, if you’re looking for a way to invest your retirement savings, consider investing in stocks through an IRA. It’s a great way to put your hard-earned money to work and cut down on your tax bill at the same time. Using a robo-advisor like Ellevest will help you find the best investments for your IRA.
The IRA also offers the solar Investment Tax Credit (ITC), which allows you to deduct the cost of an eligible solar facility, such as a solar panel or wind turbine, from your tax liability.
Investing In Rental Properties
If you’re interested in real estate investing but don’t have the money to spend on your own properties, an IRA is an excellent way to get started. With low interest rates, affordable mortgages and real estate inventory at a premium, this is the ideal time to scoop up rental properties that will pay you in spades in a few years or less. In addition, a real estate IRA will cut your tax bill down considerably, as opposed to a traditional 401(k) plan, which is still taxable on your dividends and capital gains. As long as you follow the right strategies, this is one of the best ways to grow your wealth over time.
Investing In Tax Credits
Tax credits are a great way to invest in renewable energy projects and reduce your tax burden. However, before claiming a credit, you should ensure that the project meets certain requirements and that your investments are made in qualified low-income communities. The IRA extends the availability of two important tax credits: the Investment Tax Credit (ITC) and Production Tax Credit (PTC).
The PTC is 2.6 cents per kWh of electricity produced by an eligible facility from “qualified energy resources,” such as wind, solar, geothermal or other alternative energy sources. The ITC is a credit equal to 30% of the cost of qualifying property placed in service during a taxable year. The IRA also imposes a new prevailing wage requirement for the ITC, which requires that the facility pay at least the local average prevailing wage to its employees during the five years that the facility is in operation. The IRA does not provide much detail on how this provision will be implemented, but we expect that the IRS will issue guidance soon.
