Raw Land Investments
Raw land investments in an IRA offer great opportunities for those who understand the process. There are generally low ongoing costs and virtually no maintenance with holding raw land assets. However, they often require quite a bit of time to produce any return on the investment.
Your self-directed account is not limited to buying and holding raw land to sell at a later date. You can invest in both improved and unimproved land with your IRA. If your IRA has enough funds, you can develop the land yourself as an asset in the account. You can also invest in a business such as a winery or a farm and build retirement wealth from the profit that business makes.
Popular raw land investments include
- Residential and commercial development property where growth is expected. The land can be sold, leased, or developed with your IRA funds.
- Oil and mineral producing land where the rights can be sold or leased to mining companies or other investors.
- Timberland where hard and soft woods can be planted and the land can be leased or sold for profit.
- Land for raising crops, cattle, and other farm animals, orchards, vineyards, and more.
Titling, Expenses, & Income
- The property is titled in the name of your IRA.
- All expenses are paid with IRA funds.
- Third parties perform any work on the land, as the IRS prohibits you and other disqualified persons from performing these activities.
- Income generated by a business your IRA owns is subject to unrelated business income tax (UBIT) and can affect your tax return. A tax professional should determine whether or not UBIT applies to the investment.