Investing in Farmland in an IRA
Did you know that you can buy farmland with your retirement account? It’s true! The IRS only designates three types of investments you cannot do life insurance, or collectibles like baseball cards and thirdly, under Internal Revenue Code section 4975, you cannot do any transaction that in some way, directly or indirectly personally benefits you or your lineal descendants. So, you can’t buy farmland and farm it yourself, you can buy farmland and lease it out to a third party. If they are not disqualified, people. Or you can simply just hold the farmland. The best part of using an IRA to buy farmland is that all the income and gains from the land will be tax deferred and go back to the IRA without tax. Plus, you gain the ability to diversify, and invest in hard assets, and assets you know and trust.
Benefits of Investing in Farmland in an IRA
Investing in farmland has multiple benefits. Among these benefits include:
- Supplying food
- Building equity
- Diversifying your portfolio
- Investing in something you know and understand.
- Less volatility than other traditional or alternative investments
- Tax advantages
How to Invest in Farmland in an IRA
To invest in farmland in an IRA, you need a Self-Directed retirement account. Generally, there are two ways to invest farmland in an IRA. You can use a traditional Self-Directed IRA or a Self-Directed IRA with Checkbook Control. A Self-Directed IRA with Checkbook Control is also known as a Self-Directed IRA LLC. With a Self-Directed IRA LLC, the IRA wholly owns an LLC, and the LLC ultimately owns the farmland, giving you limited liability protection as well as more control as the manager of the LLC. If you’re self-employed and want to invest in farmland, you can use a Self-Directed Solo 401(k) or a Self-Directed SEP IRA.
Did you know that with a Self-Directed IRA, you can invest in real estate and other alternative IRA investments for one flat fee? If you want to learn more about investing in farmland, give us a call, schedule a call, or use the contact forms and one of our IRA experts will contact you directly.
