Using Your IRA or 401K to Invest in Mexican Real Estate

By: Charles
Sipe With the stock market in flux and the price of commodities high, many investors are trying to find other vehicles for building and diversifying their retirement portfolio. One way to diversify individual retirement investments is to use your IRA or 401(k) to invest in real estate. Qualified retirement money can be accessed to include personal real estate ownership, whether it be a second home, investment property or commercial/office space.

With Mexico real estate prices just starting to recover from the global recession, investors can purchase homes at significant discounts. Recent prices for coastline homes in popular Baja Mexico ranged from $100K to $1 million².

There is more than one way to invest in real estate using an IRA or 401K and it is important for investors to consult with a financial planner or tax advisor who is knowledgeable in this area to determine the best method of investment.

One method is to have the IRA partially or completely fund the real estate purchase but have the property owned outside of the IRA. Multiple IRA owners can own the same property and there are no limitations on what type of property can be purchased and whether or not the IRA holder can reside in the property¹.

The other method is to have the real estate owned within an IRA. One limitation of this method is that the IRA holder cannot live in the property owned by the IRA. Any proceeds from the property must go back into the IRA¹.

As the real estate market in Mexico recovers, using your IRA to invest in Mexican real estate can be a smart way to diversify your retirement portfolio and grow your real estate holdings.

Sources:
1. Purchasing a Second Home Using IRA or 401k Rollover -Solutions Abroad

2. Home Hunting in…Mexico -NY Times