Savvy investors are always looking for ways to make more money while paying fewer taxes. It’s the American way and if you aren’t thinking this way you need to change your attitude. Because the more you can put aside tax-free as an investor, the more you’re going to have available to you when you finally do decide to retire.
Believe it or not, Health Savings Accounts are an amazing opportunity for real estate investors whether they know it or not. A Self-Directed Health Savings Account gives account holders the option to invest in alternative ways like real estate, private business, crypto currencies, bank notes, and more. As you can undoubtedly tell, this is an excellent way to grow your real estate portfolio using tax-deferred money.
What Is a Health Savings Account?
This account is known as a tax-advantaged savings plan that works very similarly to a self-directed IRA. But instead of saving up this money for your retirement, you are saving and growing this money to use toward medical expenses in case you’re ever in need of capital to pay for your medical bills.
The great thing about contributing funds to an HSA is that they are tax-deductible. So each year, if you contribute the full amount – which is $6000 at the current time – you’ll be able to lower your taxable income by $6000. So it’s a great way to keep Uncle Sam out of your pocket for a little while longer.
Plus, when you earn money in your health savings account you aren’t going to have to pay any taxes on the money earned. This is just like a self-directed IRA account. And even better, if you have to make a withdrawal your withdrawal is going to be completely tax-free as long as the money is being used toward medical expenses that are qualified under the current rules and regulations.
Next, many people might decide to change health plans after opening up their HSA. They fear that they’re going to lose the money once they change plans but nothing could be further from the truth.
But here’s the best benefit of all: once you reach 65 years old, you can begin withdrawing these funds to use however you want without suffering any penalties whatsoever.
How Can I Use a Health Savings Account to Invest in Real Estate?
This is the question on everyone’s mind because they want their real estate to grow in value as part of a tax-free account. In this case we are talking about a health savings account.
Well, the simplest way to buy real estate is to take the money in your health savings account and use it to make your real estate purchase. This is only possible as long as you are using a self-directed HSA. A self-directed HSA lets you have a lot more freedom to choose the way the money is invested in your account.
The great thing is you do not even need to have the full amount to buy property using your HSA. So if you want to use it to pay that down payment, as an example, you can do so legally and still have this investment be a part of your tax-free HSA account.
Or maybe you don’t actually want to own physical real estate. You could invest in real estate related stocks if that’s what you prefer. But most people benefit more from actually owning physical real estate that they’ve purchased in full or partially with the proceeds of their HSA.
Other Big Benefits of Self-Directed HSA Investments
This account is like having another Roth IRA account so you should definitely take advantage of it. The other big benefits include:
- grow your account tax-deferred
- self-directed HSAs allow you to invest in private businesses, stock market options, crypto currencies, real estate, bank notes, and other nontraditional retirement investments
- you can use the proceeds however you see fit after the age of 65, but you will pay taxes on your withdrawals at this time
- the account roles over year after year, so you will not lose your money if you do not use it
- the account is tax-deductible off of your gross income
You can probably tell that the benefits of a health savings account are excellent. They are perfect for real estate investors looking to grow their investments tax-free. Use this unique opportunity just like you’d use a self-directed IRA and reap the rewards later on in life when you turn 65.