Permalink Submitted by Denise Appleby on Tue, 2008-10-28 22:32
Yes. But the IRA agreement/custodian may or may not allow it. You may want to review the IRA agreement to determine if it can be done with the custodian, and if so , the limitations that apply. Those that allow it may limit the types of options that are permitted in the IRA
Permalink Submitted by mk foss on Fri, 2008-10-31 22:54
There is a UBIT implication when an IRA owns debt-financed property – typically mortgaged real estate. There’s not a problem with margin – except that the margin interest expense depletes the value of the fund.
It’s always a shame to have a tax deductible expense go to waste because it’s paid by a tax exempt entity. If the IRA owner were to pay the margin interest, that would be an excess contribution.
Permalink Submitted by Denise Appleby on Tue, 2008-10-28 22:32
Yes. But the IRA agreement/custodian may or may not allow it. You may want to review the IRA agreement to determine if it can be done with the custodian, and if so , the limitations that apply. Those that allow it may limit the types of options that are permitted in the IRA
Permalink Submitted by charles lore on Thu, 2008-10-30 00:26
Is there a UBIT implication to using margin?
Permalink Submitted by mk foss on Fri, 2008-10-31 22:54
There is a UBIT implication when an IRA owns debt-financed property – typically mortgaged real estate. There’s not a problem with margin – except that the margin interest expense depletes the value of the fund.
It’s always a shame to have a tax deductible expense go to waste because it’s paid by a tax exempt entity. If the IRA owner were to pay the margin interest, that would be an excess contribution.