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Did you know that retirement accounts, both 401-K's and qualified plans, can own real estate as part of their investment portfolio? This provides diversification instead of just stocks, bonds and mutual funds in your retirement account. REIT's, both public and private, can be put into retirement accounts. Public REIT's can be bought through your regular stock broker, but 1031Replace.Com can assist you with private REIT's (see REIT's section of website).
But, you can also put other kinds of real estate, including TIC's, in retirement accounts if there are sufficient funds in the account to accommodate such an investment (TIC's have minimums which are usually higher than REIT's). For TIC's and other real estate investments in retirement accounts, we refer the set up and administration to Entrust of Tampa Bay (www.EntrustOfTampaBay.com). By the way, mortgages on real estate placed in retirement accounts must be non-recourse (this is not an issue with public and private REIT's, however, because there is no direct ownership of the underlying real estate). TIC's generally come pre-packaged with a mortgage component which is almost always non-recourse, so TIC's are definitely a candidate for retirement accounts. However,
they may be subject to unrelated business
income tax (UBIT).
LLC
and LP interests are generally not subject
to UBIT so these may be more attractive
than TIC's for retirement accounts. Also,
the minimum investment is usually lower.
Many TIC offerings include an LLC or LP
offering in the same property for non-1031
and retirement account investors since the
TIC's are designed primarily to be replacement
properties in 1031 Exchanges.
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