Health Savings Accounts are medical savings accounts that provide tax advantages for Americans. You must be enrolled in a High Deductible Health Plan (HDPD) to have an HSA. When you contribute money into your account you are NOT subject to Federal Income Tax.
An advantge to having a HSA is the funds can be rolled over and accumulate if they are not spent. This allows you to grow your account providing more money if you need it for medical reasons because you, the indivdual, owns the account.
Funds from your HSA may be used for qualified medical expenses anytime when needed not having to worry about federal tax liability. If you withdraw your funds for non-medical purposes, then your account is treated like any other IRA. These non-medical withdraws may provide tax advantages if taken after retirement age.
How does this relate to real estate?
HSA's can be self directed and invested in real estate. If you withdraw from the account and put it into real estate you can buy investment property tax deferred. When I was taking Mark Kohler's Tax Class at NR's real estate investment college, he showed us the purchase contract of a house he bought from another investor using his HSA.
Imagine withdrawing $5,000 from your account as earnest money on a property, contracting that property and assigning the contract over to a third party and earning an assignment fee of $10,000. You then put that money back into the HSA, increasing your medical funds. Imagine doing this with an apartment building.
Utilizing the power of an HSA is a fantastic way to grow your personal medical savings account and building funds long term for retirement tax free. Sounds awesome to me! I don't know about you, but I love this stuff and I am glad to have found amazing educators and a system that supports us.
How are your medical savings and retirement accounts doing?
Tony
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