May 6, 2015

Property Taxes On Investments

Jon Galane
5 min

One of the benefits of having a Mountain West IRA self-directed retirement account is the variety of allowable investments.

One of these options is investing in real estate, whether it be residential or commercial.

Those looking to take the plunge and start investing their retirement savings in real estate should take into account the associated property taxes because they are the second largest fixed cost investors will face when calculating income from a property.

Property taxes are based on the sales price of the property and the market that it’s in. Investors shouldn’t always rely on what the previous owner’s property taxes were for calculations.

If the previous owner bought it at as a distressed property or many years ago, the property taxes were most likely lower for them than they will be currently.

Depending on the estimated property taxes, investors can decide if the property is worth investing in, or if the taxes would eat up too much of the potential income.

There are many tools and websites available to help investors look into this before buying a property.

By adding real estate to their portfolio, an investor will diversify and spread their risk.

Real estate is also generally considered consistent with providing a stable, although not guaranteed, cash flow.

Contact Mountain West IRA for more information about the rules of investing in real estate with a self-directed retirement account.

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