Can an IRA/Roth IRA be utilized to buy Rental Property?
Forum:
My client recently gave me an article from “Bottom Line Personal Winter Edition.” The article suggests that you can Invest in Rental Real Estate properties using your IRA or Roth IRA assets without penalty or taxes. Is this accurate?
The author is Marjory Abrams. At the end of the article, she recommends that readers sign up for her confidential report titled, “Money Secrets of the Rich & Well Connected.”
I am skeptical and would like your feedback.
Thank you,
Mike
Permalink Submitted by Alan Spross on Sun, 2008-01-20 21:19
This can be done if it is done using a professional IRA custodian that can manage the process correctly to avoid prohibited transaction risks which can result in disqualification of the IRA.
I suggest very thorough research into the process and whether it fits the client’s financial situation. You might start by googling “self directed IRA custodians.”
Permalink Submitted by Mike Steele on Sun, 2008-01-20 21:51
Thank you,
TDAmeritrade is the custodian that I use for my RIA activities. Do you know if TDAmeritrade or Schwab would meet your requirements?
Mike
Permalink Submitted by Alan Spross on Sun, 2008-01-20 21:59
Mike,
I don’t think they do. Some of the experienced IRA custodians for real estate related property are Pensco Trust, Equity Trust, and Guidant.
Permalink Submitted by Daniel Liddle on Mon, 2008-01-21 02:03
There are many custodians-I have mine with FISERV and a small one with Equity Trust. I’ve also heard good things about Sterling Trust. One can buy rental properties, raw land, single family houses, and even mortgages in their IRA. On this forum I hardly ever read about people who actually put deals together. The biggest problem most people will have when they want to buy property is the lack of substantial money in their IRA. I firmly believe that people should have a Roth IRA to buy property-no taxes after 59.5 ever. In 2007 I bought a mortgage from a bank for my IRA for $5000 plus back taxes of about $2500 plus title work and attorney fees for about $8500 total. Then I contacted the morgagor and paid(FISERV paid) her $300 for her to deed the property to my IRA.If she didn’t deed the property to FISERV I had no choice but to foreclose. This is a lot of land with a septic and well ready for a mobile or house. I thought I had it sold for $20,000 last month but that fell through. I’ll have it sold by the summer?? I also bought two more mortgages from another bank-one property is an old bar/hotel and the other is a house with a family living there. In 2007 I spent about $50,000 on mortgages. In 2006 I bought one mortgage and seven properties for about $120,000. Three of those seven have been sold. Not for the faint of heart although I have averaged 22% per year. Can I keep getting 22%??? I am going to give it the ol college try!!