Retired with rental real estate in an Ira
I have a rental house in a trad Ira with no mortgage and iam turning 60 yrs. old
I paid 200,000 for this home that is now worth 100,000. And nets 800$ per month income.
Would it make sense to convert to Roth now with the decrease in value and collect rent tax free?
S
Permalink Submitted by Alan - IRA critic on Mon, 2014-12-08 04:23
It might. Basically, the decision is the same regardless of the asset type. You want to convert at a tax rate that is equal to or lower than you expect your marginal rate to be in retirement. Converting real estate however typically must be done at one time which means you cannot convert in increments and that will probably make your rate higher. You also must be sure of the value the custodian will report for the conversion before you convert. I am not considering what the home was once worth of whether it will appreciate back toward that level. There is something unusual about a property that dropped 50% in value and has not recovered as real estate in general has recovered.