SEP IRA or IRA for Real Estate Investing
I’m selling a house and profiting about $50k. I would like to set up an IRA and LLC to defer taxes to be able to defer the maximum amount legally possible. I was told by another advisor the maximum I can put into the IRA each year is $17,500 or $18,000. If this is true, is it possible for one individual to set up multiple IRA’s? I have the potential to make $150-$200k profit on my next investment and taking $18,000 away from my gain would only be a minute benefit compared to my gain.
What will better suit my needs for tax deferment, SEP IRA or a regular IRA?
Permalink Submitted by Alan - IRA critic on Wed, 2013-01-16 00:18
It’s not clear that you even have net self employment income to make any IRA contribution. You would have to determine how your taxes will be filed. Are you in the real estate business, how long have you owned the property and do you have other properties. Do you collect rental income? Now, even if you do qualify for an IRA contribution, setting up more than one IRA account will not increase your allowed contribution. You might also check with a tax advisor regarding the entity you establish and whether you will owe self employment tax. An individual who owns a few properties will usually file Sch E and self employment tax is not due, but then neither is an IRA contribution (SEP or other IRA). It sounds like your advisor thinks that you will pay SE tax and your net earnings from SE will be in the 18k area, but it’s not clear whether you qualify for that or not. More info is needed on your overall situation.