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Can anyone enlighten me on the details of holding Real Estatein an IRA?
09-22-2008, 05:06 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 2,203
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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!
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09-22-2008, 08:34 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by thefed
Too bad Vanguard doesnt allow it!
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There's a good reason for that.........
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09-22-2008, 09:23 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,566
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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.
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“One day your life will flash before your eyes. Make sure it's worth watching.”
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09-22-2008, 09:29 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 2,203
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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
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09-22-2008, 09:58 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 1,396
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I think it's a terrible idea.
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09-22-2008, 10:25 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Sep 2008
Posts: 2,171
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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.
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09-23-2008, 12:34 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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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.
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09-23-2008, 01:49 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2005
Posts: 6,115
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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
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09-23-2008, 07:14 AM
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#9
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Recycles dryer sheets
Join Date: Jun 2008
Posts: 59
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Quote:
Originally Posted by clifp
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.
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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!!
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09-23-2008, 07:17 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,566
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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
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09-23-2008, 07:35 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 2,203
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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
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09-24-2008, 06:06 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 2,203
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these would not be purchased with financing, cash only
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09-24-2008, 06:52 AM
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#14
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Moderator Emeritus
Join Date: Feb 2004
Location: minnesota
Posts: 13,228
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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.
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