Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Can anyone enlighten me on the details of holding Real Estatein an IRA?
Old 09-22-2008, 06:06 PM   #1
Thinks s/he gets paid by the post
thefed's Avatar
 
Join Date: Oct 2005
Posts: 2,203
Can anyone enlighten me on the details of holding Real Estatein an IRA?

I found lots of info on sites of custodians, but want an understandable comprehensive summary of what i can/cant do as well as how to go about it. Too bad Vanguard doesnt allow it!
__________________

__________________
thefed is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-22-2008, 09:34 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by thefed View Post
Too bad Vanguard doesnt allow it!
There's a good reason for that.........
__________________

__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 09-22-2008, 10:23 PM   #3
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,412
Holding real estate in an IRA isn't really a great idea. That is just my personal opinion, based on my scant knowledge of how it works.
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 09-22-2008, 10:29 PM   #4
Thinks s/he gets paid by the post
thefed's Avatar
 
Join Date: Oct 2005
Posts: 2,203
I've read a lot about it and it seems to be a very viable and advantageous option if it matches your goals.

I have a meeting set up with a company that specializes in this kind of thing. I'll give the details....but curious about anyone's opinion/experience
__________________
thefed is offline   Reply With Quote
Old 09-22-2008, 10:58 PM   #5
Full time employment: Posting here.
 
Join Date: Sep 2006
Posts: 620
I think it's a terrible idea.
__________________
JustCurious is offline   Reply With Quote
Old 09-22-2008, 11:25 PM   #6
Thinks s/he gets paid by the post
kyounge1956's Avatar
 
Join Date: Sep 2008
Posts: 2,172
Try reading a book called IRA wealth : revolutionary IRA strategies for real estate investment by Patrick W. Rice. It was published in 2003 so some of the info may be out of date, but it should give you a general idea of what you can and can't do. If your library doesn't have a copy ask for it on interlibrary loan and you can tell them the Seattle Public Library has a copy. Hope that helps.
__________________
kyounge1956 is offline   Reply With Quote
Old 09-23-2008, 01:34 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,427
The tax laws are exceedingly complicated with owning real estate in IRA (unless it is cash purchase). So make sure you talk to an accountant.

I have used Schwab's Alternative Investment department to invest in a private partnership (a mutual fund of start ups) in my IRA. Schwab's fees were quite reasonable and believe they also allow real estate investment.
__________________
clifp is online now   Reply With Quote
Old 09-23-2008, 02:49 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 4,949
its a really bad idea with many negatives, including not being able to take a depreciation deduction and not being able to pay any bills or put money into it from outside your ira sources i believe
__________________
mathjak107 is offline   Reply With Quote
Old 09-23-2008, 08:14 AM   #9
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 59
Quote:
Originally Posted by clifp View Post
The tax laws are exceedingly complicated with owning real estate in IRA (unless it is cash purchase). So make sure you talk to an accountant.

I have used Schwab's Alternative Investment department to invest in a private partnership (a mutual fund of start ups) in my IRA. Schwab's fees were quite reasonable and believe they also allow real estate investment.
Agreed it is very complicated and hard to find a custodian. You can't have any debt against it as it goes in, you can't use it for personal use, you have to place enough cash in there with it to pay all the expenses or a custodian won't touch it and those are just a few things off the top of my head.

About three years ago, I started noticing our firm getting calls for this and I turned to our IRA person and said, "uh oh, here's a bubble about to burst" just like variable life insurance and tech stocks in the late 90's blah, blah, blah. About the time everyone flies toward an idea, it's time to get the hell out!!
__________________
huskerblue is offline   Reply With Quote
Old 09-23-2008, 08:17 AM   #10
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,412
Husker, we have a grand total of one client holding real estate in an IRA (and actually, that is even a private LP that owns the land). We have a pretty high number of folks holding LPs in their IRAs, though, through Schwab's Alt Investment program. We did know of a guy that invested in a startup bank in his IRA. Yep, belly up and no way to take the losses. Dumb!
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 09-23-2008, 08:35 PM   #11
Thinks s/he gets paid by the post
thefed's Avatar
 
Join Date: Oct 2005
Posts: 2,203
Seems to me to be a good way to build wealth through real estate if 1031 exchanges arent an option. Lets say I buy a home, rehab it, and either sell or rent it. Then i wait another year or 2 to do another.... In this case, capital gains treatment would be nice after a year. a 1031 would only make sense if I were to do several in quick succession. If it's held in the IRA however, the gains can grow tax-free until I'm ready to do another.


Anyhow, I'll post the details after the meeting

thanks
__________________
thefed is offline   Reply With Quote
Old 09-23-2008, 08:48 PM   #12
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,211
There are a few threads on the board that talk about the issue. You are planning to finance the real estate, yes? That creates some tax problems.

Here are some of the old threads: Using retirement acct to buy RE

In this thread, Boont and I talk quite a bit about the tax problems:

Real Estate Roth
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 09-24-2008, 07:06 AM   #13
Thinks s/he gets paid by the post
thefed's Avatar
 
Join Date: Oct 2005
Posts: 2,203
these would not be purchased with financing, cash only
__________________
thefed is offline   Reply With Quote
Old 09-24-2008, 07:52 AM   #14
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,211
OK, that helps. Do you have enough cash already in an IRA to do this? You can't make a loan from yourself to an IRA to make the purchase and the IRA yearly contribution limits are, needless to say, limiting. Be sure to educate yourself and read the IRS publication on prohibited transactions. I also suggest talking over with a tax adviser to evaluate the pros and cons.
__________________

__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Real Estate in your IRA megacorp-firee FIRE and Money 4 09-11-2007 08:13 PM
Am I holding too much Real Estate? zcung FIRE and Money 20 06-29-2006 09:07 PM
All in the details devo Young Dreamers 15 04-14-2006 08:08 PM
self-directed IRA for real estate vic FIRE and Money 0 04-24-2005 06:01 PM
Real Estate in a self-directed IRA???? ryalmokas FIRE and Money 2 02-23-2004 10:29 AM

 

 
All times are GMT -6. The time now is 02:40 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.