LITTLE ROCK, Ark. (KTHV) -- IRA stands for Individual Retirement Account, and it's basically a savings account with big tax breaks and it can even be used to invest in real estate.

Stephanie Parker with Delta Trust and Bank stopped by "THV 11 News This Morning" with more.

It's time of year when people start working on their taxes and they are looking for deductions - many explore an IRA as an option. You have until April 15 to contribute to a traditional IRA for 2012. If you are under the age of 50, you can contribute $5,000 and if you are over 50 years of age there is a catch-up provision for $1,000 which mean you can contribute $6,000. And for 2013 the amount is increasing by $500. If interested in contributing, first talk to your CPA or tax advisor.

Is that contribution amount fully deductible? Depends on several factors including your tax bracket. Even if you aren't eligible for the deduction, an IRA still is a great benefit to anyone trying to save for retirement or possibly the rest of your life. An IRA permits you more freedom of investment choices. With an IRA, you can invest in pretty much anything that is not considered a collectable - stocks, bonds, mutual funds, privately held stock and real estate.

Real estate investments help people control their assets a little more. If you have a rental property then you know how much you will receive in monthly rents. That's more comforting to people than having their money in the open stock market and worrying about where the Dow will close.

Most people choose to purchase farmland or timberland. Then, the income from their crops contributes to the IRA account. Others use rental properties. Someone can purchase a commercial space through their IRA and then the rent from the property is applied to the account.

Real estate investments cannot be used for your personal use. Farmland just as rental properties should be leased/rented and crop proceeds or rental incomes deposited into the IRA, keeping in mid that the property cannot be rented to a family member. Timberland is held for timber maturity as which time the timber is harvested and proceeds of the timber sales go in to the IRA as well.

Purchasing real estate in an IRA can be very complex, this is my specialty at Delta Trust and I'm happy to answer any questions or provide you literature, but always consult with a tax or legal professional before doing this.

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