Inherited IRA Quesiton
This is my first post.
I inherited an IRA when my mother died.
She also owned rental property that I never lived in.
Can I own this rental property inside the inherited IRA?
I’d use the IRA funds to buy out my two siblings.
Stephen
Permalink Submitted by Alan Spross on Thu, 2011-10-27 00:05
Stephen,
You cannot transfer an owned property into either an owned or inherited IRA. An IRA could purchase the property, but not from you or other close relative. I think you probably own the rental now through inheritance.
You must take annual RMDs from the inherited IRA starting with the end of the year after your mother passed. But that is just a minimum and there is NO maximum. You could take out as much as you wish and use the funds to buy out the siblings interest in the rental property. However, the distributions from the inherited IRA will be taxable.
You might check to see if your mother had made any non deductible contributions to the IRA and filed Form 8606 with her tax returns. If so, part of your inherited IRA will be tax free and you would have to file your own 8606 to calculate the proper % that is tax free. There is never a penalty for taking distributions from an inherited IRA, only if you fail to take out your annual RMD.