planning. The largest part of his day-to-day practice is working with people in the area of tax advantaged real estate transactions such as like-kind exchanges, real estate investments by IRAs and qualified plans and related areas, and estate planning. He recently published the book IRA and 401(k) Investment in Real Estate for Syndicators, Other Real Estate Professionals and the Rest of Us, which expands upon some of the topics addressed in this article. For more information, visit his website at www.realestateinira.com. 2600 One Wells Fargo Center 301 South College Street Charlotte, North Carolina 28202 704.372.2500 Phone 704.372.2619 Fax ssmith@horacktalley.com www.horacktalley.com IRA investment in real estate some years ago when an investment opportunity came up in the Phoenix area and I did not want to use all of the funds I had available in my bank account. I therefore turned to my IRA and made the investment, partnering with my IRA so that I provided some of the funds needed for the investment and my IRA provided a smaller portion of the funds. That investment has since been sold at a significant profit and the proceeds reinvested. As a result, my IRA now owns a percentage interest in a limited liability company which owns a small shopping center in Goose Creek, South Carolina. As it has become obvious in the last few years that we cannot depend on Social Security and investments in the stock market for our retirement, I have become more and more interested in the notion of IRA investment in real estate. Even if investment in real estate is not totally the answer for you, then some diversification from investments in the stock market. The same general concepts also apply to 401(k) plan account investments in real estate but with some additional complications and opportunities that are more particularly described in my book. question is what can I not invest in rather than what can I invest in, because the answer is your IRA can invest in anything with three specific exceptions. You will not find any specific rule in the Internal Revenue Code as to what an IRA can invest in. Rather you will only see rules specifying the limited things IRAs cannot invest in. you cannot or should not invest your IRA as follows: discussed more specifically below. what Are the consequences of Investing in them? of art, rugs, antiques, metals (except as provided below with respect to certain coins), gems, stamps, alcoholic beverages (e.g., vintage wines), musical instruments, historical objects (such as documents or clothes), most coins (see below) and other items of tangible personal property that the IRS determines are collectibles. There is an exception allowing investments in one, one-half, one-quarter or one-tenth ounce U.S. gold coins or one-ounce silver coins minted by the Treasury Department as well as certain platinum coins and certain gold, silver, palladium and platinum bullion. The impact of investing in a collectible is that the investment is regarded as being distributed to the IRA owner at its fair market value in the year of the investment and as if |