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RiverOtter
01-14-2005, 10:14 AM
Investing in real estate? Anybody.... Anybody???

al cole'holic
01-14-2005, 10:24 AM
Investing in real estate? Anybody.... Anybody???
...I don't see how that's possible, unless your IRA can pay for the entire house..?? :confused: ..then property taxes from then on..??

Up 4 River
01-14-2005, 10:26 AM
Depending on you situation you can pull out up to $10,000 in you principal without paying the 10% to the IRS for an early withdrawal. If I am not mistaken it has to be for a first time home buyer though. I would check with your advisor and CPA before making the transaction.

welk2party
01-14-2005, 10:27 AM
Yes. It is called a self-directed IRA. It is a terrific way to take control of your IRA. I have helped people do this to buy land.

al cole'holic
01-14-2005, 10:31 AM
..I understand self directing, just means you take control..and the first time home buying, that I remember...but not investing in real estate.?

welk2party
01-14-2005, 10:38 AM
You can use the self-directing IRA to purchase investment property...land, apartments, etc. There are rules of course. You cannot live in it and it cannot be a vacation house. You can use in some cases up to 50% of your IRA balance for the purchase. There are restrictions. Typically, the IRA has to have enough to cover taxes and what not. The IRA has to pay for everything on the property. The IRA has to pay for the whole property, or you can finance the balance as long as the balance is not greater than the IRA contribution and debt service, maintenance, etc.

Up 4 River
01-14-2005, 10:39 AM
You don't invest your IRA in real estate, but you use the dollars that were in your IRA for a portion of the purchase. It's not a common thing to do, but some people do it.

Mandelon
01-14-2005, 10:43 AM
You can direct some of those IRA dollars to an LLC that you form. The LLC can then buy or invest in properties. Other investors can do it as well to buy an apartment building. The LLC gets a bank loan, with as a guarantor, IRA money for the downpayment.
We are doing this now for a condo conversion project. My partner is putting $200K of IRA money into the deal.

rodnjen
01-14-2005, 12:42 PM
Do you pay ordinary income tax on the portion you withdraw?

RiverOtter
01-14-2005, 12:46 PM
Thanks Welk and Mandy. Just heard of this today. Fixing to get started and looking at all my options. ;)