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10-31-2008, 09:55 AM
| | Member | | Join Date: Mar 2007
Posts: 35
| |  buying land with your IRA
What is the name of your state (only U.S. law)? Georgia Can you buy land with your IRA and if so what happens when you get 70 1/2 years old?. Do you have to sell a portion or all of it? This came to mind when I saw a piece of land owned by IRA- John doe and the tax bill was sent to the local bank. If I can I would like to do that. |
10-31-2008, 10:16 AM
| | Senior Member | | Join Date: Aug 2005 Location: St. Odo of Cluny Parish
Posts: 28,211
| | | An IRA may have real estate in it.
Let me caution you to go to a very trusted and experienced financial professional to do this for you.
There are scams galore out there in this area.
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10-31-2008, 11:13 AM
| | Senior Member | | Join Date: Mar 2006
Posts: 5,018
| | | I agree with SJ. You can do it. You better get professional advice.
Even though we deal with income property in our business, anyone wanting to do this we refer to outside experts. There are many pitfalls. One, for example, is the property tax issue you mention. If the IRA trust does not pay it, you have violated the IRS rules on the matter. (Upkeep and management, same issue.) I'd have to look up things as to what might happen in this case, but I assure you it would not be good. (Breach of the trust, making all taxable or excise tax are two possibilities which come to mind.) Also, you have the sale problem for minimum distributions. No one should have all their IRA in properties.
Most who want to do this buy income properties which generate income. It's not as big an advantage to shield capital gains through property appreciation. While I can understand looking for an investment from a big portion of cash sitting in an IRA, putting it in property is a very aggressive choice. You need to be made aware of the risks and it is not for anyone but a sophisticated investor. (Well, maybe a REIT investment for average guys like me, but not direct investment.)
Be very careful. Even if done right, you may have done wrong.
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11-01-2008, 12:34 AM
| | Member | | Join Date: Feb 2005 Location: Elgin, IL USA
Posts: 960
| | | A few of the issues: You cannot sell property to your IRA. You, your family, beneficiaries, or fudiciary cannot use property in your IRA (cannot buy your residence, vacation home, etc.). You cannot have any control over the property (cannot collect rent, be your own handyman or anything related to the property). If you violate those or any other rules, it is instantly considered a distribution with tax and possible 10% early withdrawal penalty. See IRS Publication 590.
Last edited by efflandt; 11-01-2008 at 12:37 AM.
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