Income - $5,000. per Month from money you can't spend
Earn Income from Tax Money!

Suppose you purchased 5 acres of pre-developed land today for $40,000

Let's say you paid $40k CASH for the land and 12 years from now a developer contacts you because he wants to buy the land. He offers you $510k per acre and you accept it. The total is $2,040,000 for your land.

If the capital gains tax is a total of 25% we'll say your tax liability is $500,000.

  • $2,040,000 - $40,000 (cost) - $500,000 (tax) = $1,500,000 net profit
  • $500,000 x .04% = $20,000. gross yearly income lost due to taxes paid

We don't want to give up that $20,000 and we don't have to if we structure our purchase in a self directed IRA. The idea is to defer taxes and to gain interest income from the tax money held in your IRA account.

Uncle Sam handing you money because you used your IRA for California real estate investing
When you invest this money in a money market account or CD at 4% you will be collecting interest of $20,000 per year on the $500,000 that you would have given to the government in taxes had the purchase been outside the self directed IRA.
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Advantages Of Using A Self Directed IRA >Next arrow to IRA and 401K investing in real estate
Deferring Taxes Page 5



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