Entrust Learning Center > Keyword: real estate > Offshore Gold & Real Estate: Using an IRA to Hold Investments Outside the U.S.

Offshore Gold & Real Estate: Using an IRA to Hold Investments Outside the U.S.

By: Munzer Ghosheh, Director of Business Development for Entrust Administration Inc.

IRA & 401(k) Insights

One of the most popular asset classes held in a self-directed retirement plan is real estate. The vast majority of IRA holders are unaware, however, that offshore properties and foreign real estate are also eligible in a self-directed retirement plan. If done properly, investing in a foreign real estate property is not any riskier than any other investment.

In addition to real estate, gold and precious metals can also be held outside the United States. In fact, very few assets in a retirement portfolio can be held offshore, but real estate and precious metals are two of them. Many investors are interested in offshore investment options like real estate and precious metals as a way to broaden their retirement portfolios and additionally, both investments may be considered long-term stores of value.

As with any investment purchased within a self-directed IRA, it’s important to do thorough research and due diligence. In the case of offshore real estate, it’s necessary to know the rules and regulations of the country you wish to invest in as well as understanding its property laws and the country’s economic and political climate. A major concern with foreign real estate investing could be the stability of the government and the socioeconomic environment in general. With precious metals, it’s important to be knowledgeable when choosing the storage depository and type of storage for your investment, in addition to educating yourself on the U.S. reporting guidelines for offshore accounts.

Keep in mind that self-dealing rules apply to offshore properties purchased in an IRA just as they do to properties purchased in the U.S. This means your IRA can’t purchase any property currently owned by you or certain members of your family. Neither you nor any family members can use the offshore property as a holiday destination. The IRA is also prohibited from selling the property to you or to direct family members. You may however, at retirement age, take the property as an “in-kind” distribution, assign the title to the property to yourself, and use it as a vacation or second home.

With so many options available to self-directed IRA investors, it’s important to remember that it’s up to you to make the right choice for yourself and your retirement plan. It’s advisable to consult your tax or legal advisor(s) for any questions concerning your personal or financial situation.

By Munzer Ghosheh, Director of Business Development
Entrust Administration, Inc.
mghosheh@theentrustgroup.com

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