Self-directed IRA for existing business; or foreign rental
I would like to set up a self-directed IRA to buy either an existing business in California (laundromat with 1 part-time employee); or an apartment in my native NZ. Most SD-IRA talk seems to be about buying real estate rather than existing businesses (and maybe that’s for good reason). I am worried about tax considerations — UBIT on the business, and nonresident withholding tax in NZ, which does have a tax treaty with USA. And then of course there’s the hassle factor. Any opinions welcome.
Permalink Submitted by Jaime Raskulinecz on Mon, 2012-10-01 13:46
I’m sure you’re aware, if you knew about UBIT, that you may not work in the business or receive any personal gain from it. Many of our clients do invest in foreign real estate. If it is leveraged there is also a UDFI tax that must be calculated.
While I’m unaware of the tax situation in NZ I would assume if these accounts are tax advantaged here they would be in NZ as well. However, that’s really a question for a tax advisor who is familiar.
My staff is very knowledgable and would be happy to discuss in more detail. We are located in north Jersey and the toll free number is 888-857-8058.
Jaime Raskulinecz, CEO
Next Generation Trust Services
Permalink Submitted by mk foss on Mon, 2012-10-01 17:24
The IRS website has an article about ROBS – an acronym for RollOvers for Business Start Ups. Not only were the plans being discqualified but most of the businesses failed as well.
An apartment in NZ would be a problem if you or a family member used it, managed it or paid any expenses for it. The IRA could be disqualified.