With the US dollar losing value every day and inflation looming on the horizon, many financial advisers recommend you buy gold and other precious metals. They have a good pitch, as gold has gone up in value significantly for a number of years. And with the Federal Debt out of control, pundits predict that the value of gold will continue to go up.
Although gold is a very safe investment in times of crisis I will argue that land is an even better value.
I always believed that land is the most stable investment anyone can buy. However, a recent email from my accountant convinced me that there are even more advantages of buying land that certainly will outshine gold and precious metals.
Here are 3 major benefits of investing in land for sale instead of buying gold:
1. You Can’t Eat Gold
This is obvious, but you can’t eat stocks, real estate or land either.
While gold and stocks are passive investments that you buy to essentially park your money in hopes that it will appreciate (gain equity), you can live on and from your land in times of real emergencies. You could grow food, raise cattle or other farm animals, hunt deer and turkey, build a cabin or house to live in, and become totally self sufficient.
Even if our currency would lose all its value you would have a place to live and food to supply your family, even trade to others, who did not have the foresight to invest in acreage for sale.
2. Tax Advantages of Land
When you buy gold, the government (IRS) consider it a collectible. That’s the same with other precious metals and gems. If you sell a collectable you are subject to the 28% tax rate and not the favorable 15% long-term capital gains rate.
Other things considered collectibles and subject to the higher 28% tax rate are works of art, rugs or antiques, stamps or coins, musical instruments, historical objects and even your wine collection.
As any real estate, land is taxed at capital gains rates, if you hold it for more than a year. Until 2012 you may not have to pay any capital gains tax when you sell land, if you are in the 10% or 15% tax bracket with your ordinary income!
3. You Can Buy Land in your IRA
You can buy land in a self-directed IRA and keep all your profits tax free when you sell.
This is a tremendous benefit for you and your family. All types of self-directed “retirement accounts” qualify, including Roth IRA’s, HSA’s (health savings accounts) and CESA’s (Coverdell educational savings accounts).
Make sure to get qualified advice before you buy land in a retirement account, because there are certain limitations on what you can do with it. For instance, you can’t live on the land, if it is in your IRA.
I you want to buy gold in your IRA you have to be more careful. Any gold you buy in the IRA must be 99.5% pure and IRS approved. Basically, only gold coins that are classified as legal tender qualify as an IRA investment. Many companies promote buying gold in IRA’s. Be very careful before you select a custodian to handle your IRA accounts and only select one that’s very well versed in investing with IRAs.