Real Estate IRA
If I buy a house with funds from a Self Directed IRA, can I in the future (say a few years) buy it from the IRA myself using NON-IRA money (the sale of my existing primary residence), depositing the proceeds back into the Self Directed IRA?? Thanks
Michael
Permalink Submitted by Alan Spross on Thu, 2012-05-24 21:16
No, that would be a prohibited transaction because your IRA cannot buy or sell to/from a disqualified person. You or organizations controlled by you or family members are defined as disqualified persons under Sec 4975.
The only way you get that property is to distribute it from the IRA to yourself as a taxable distribution. Of course, from a Roth IRA the distribution may be entirely tax free.
Permalink Submitted by Michael Pressman on Fri, 2012-05-25 19:01
That’s what I was afraid of.. thanks!
Permalink Submitted by Dave Owens on Sun, 2012-05-27 15:10
There is a way that you can buy a house in your IRA and ultimately get it out of your IRA without a problem. If you purchase an investment house in an IRA and rent it for say 5 year. Then lets say you want to live in it. You can file a petition to the Department of Labor asking to buy the house from your IRA. It is not that on common or difficult. It is paperwork but it can be done. You will not be breaking any prohibited transactions. Good luck.
Permalink Submitted by Jaime Raskulinecz on Wed, 2012-05-30 15:59
There are also other ways to accomplish this. AS the last poster mentioned, you can apply to the IRS for an exception. Typically, they will look at whether the IRA will get the same benefit from selling to the IRA owner or selling to someone else. A third party appraisal can tell everyone what the house is worth. However, you may also take the entire house out of the account as a normal distribution. Or, if you want to minimize taxes, you can also take percentages of the house out as a normal distribution over a period of years.
If this investment is made within a ROTH IRA, you can take the entire house out as a normal distribution and pay NO TAX as long as the account has been open and funded for 5 years or more.
My firm specializes in self-directed retirement plans. I can provide more information if you wish.
Jaime Raskulinecz
Next Generation Trust Services
Permalink Submitted by Jaime Raskulinecz on Mon, 2012-08-13 14:28
Some of the other ways to accomplish this are listed in my last post. However, for an in depth discussion you may call our office and speak to one of our staff members.
Jaime Raskulinecz
Next Generation Trust Services, LLC