IRA that owns foreign real estate
As mentioned in my earlier messages, I’m thinking of investing my IRA in real estate. My IRA will create an LLC, and the LLC will own the real estate. It is likely that some of the real estate will be located outside the USA. My research indicates that a US LLC that owes foreign real estate has to annually file a Form 5471, which is a form called “Information Return of U.S. Persons With Respect To Certain Foreign Corporations.” There are potentially big penalties for failing to file the form. I don’t see an exception to the filing requirement for an LLC that is owned by an IRA. Does anyone have an IRA-owned LLC that holds foreign real estate, and if so have you found a way to avoid filing a Form 5471?
Permalink Submitted by Jose Morales on Mon, 2009-07-13 15:57
You may want to contact an IRA Custodian that specializes in real estate and other non-traditional IRA investments. A company like PENSCO could save you a lot of headaches and money by helping you cover all your bases with these types of transactions.
Permalink Submitted by James Houle on Mon, 2009-07-13 17:46
I talked to Pensco about this. They said they don’t know the answer and, in any event, they don’t prepare tax filings relating to IRA investments–that’s all the IRA owner’s responsibility.
Permalink Submitted by Ed Mangan on Fri, 2009-08-28 17:29
new to forum and saw this. there are things to consider when forming that LLC.
if I remember my research on it, you or your family can not [u]run[/u] it, [u]work[/u] for it
or [u]live in[/u] any of the properties bought or if rented out.