IRA Invest in Real Estate

[John3cpa]

Client wants to use IRA cash to invest in a troubled piece of real estate with a partially completed house on it, complete the construction, then sell. Problem...he must add cash from his personal residence equity line to get the job done until a large IRA CD investment comes due in a couple of months at which time he wants to use that IRA cash to pay back his equity line. Sounds like the cash from IRA CD paying back equity line is a taxable distribution, no?

Any ideas??

[Bees Knees]

He cannot be the trustee of his own IRA. Somebody else would have to take the IRA funds, purchase the real estate with those funds, and then manage the real estate.

I doubt that is what he had in mind.

[MLINDER42]

Ira Real Estate

It would also be self dealing if he borrows money from himself.The only wasy is to find a custodian that will let him buy real estate.They are out there but they charge high fees.He must cash the CD and pay all cash.

[Burke]

Client wants to use IRA cash to invest in a troubled piece of real estate with a partially completed house on it, complete the construction, then sell. Problem...he must add cash from his personal residence equity line to get the job done until a large IRA CD investment comes due in a couple of months at which time he wants to use that IRA cash to pay back his equity line. Sounds like the cash from IRA CD paying back equity line is a taxable distribution, no?

Yes, the cash withdrawal to pay back the equity line would be a taxable distribution.

[SFBOB]

Self Directed IRA Accounts

I had an oil well investment with Pensco Trust Company for many years until it was sold. I then had CD's. The management cost for CD's was of no value so I closed the Pensco account..
Google Pensc Trust or call 1-866-818-4472 they will be able to answer your clients questions. Hope this helps. Bob

[John3cpa]

We found a local Pensc Trust office and client is in contact with them.

Thanks all!! This is a great resource, especially for "sole guys" like me.