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    #1

    ira rollover proceed question

    Can i...

    take a ira rollover of say $150,000 and use these proceeds to buy a house outright (therefore i am avoiding all the lcosing costs etc...)

    then secure my home equity loan for $150,000 and then roll the $150k back in to a new IRA, all within the 60 days

    what are your thoughts?
    Tags: None
    #2
    Do yourself a favor

    You need to contact a local tax professional who can help with your question instead of relying on tax advice from an internet board. This board is designed for tax professionals to interact on issues they encounter in their practice - we cannot possibly know all the variables in your situation and therefore any advice you get could be the wrong advice for you. I suggest you look for an Enrolled Agent (EA) or a CPA who specializes in taxes in your area.

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      #3
      A quick word of caution, I've seen such a plan and on paper it seems OK... But I bet that only 50% really happen as planned. In this loan application times you can't count on anything going as planned.
      This post is for discussion purposes only and should be verified with other sources before actual use.

      Many times I post additional info on the post, Click on "message board" for updated content.

      Comment

        #4
        I'm not addressing the tax question because you need to discuss it with a tax pro in your area. However, from an investment standpoint the home equity LOC will probably carry a higher rate than a first mortgage if you get a fixed rate. Worse yet, it will probably carry a variable rate. Either way, the additional interest you pay will likely exceed the closing costs you saved at the outset within a short period of time. Then you will be locked into continuing to pay the excess as long as you have the loan.

        A second huge problem would be if you fail to secure the anticipated loan within the 60 days - mybe through some minor foul-up on the part of a clerk processing your paperwork. After you finish paying the penalties & taxes, you'll wish you'd never heard of such a risky scheme.
        "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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          #5
          Another Senerio

          Do your home work, run the numbers, it could very well work as planned.
          Confucius say:
          He who sits on tack is better off.

          Comment

            #6
            You are not allowed to borrow from an IRA. And technically that is what this is. So, if the IRS decided to pursue it, it would immediately disqualify the entire IRA.

            I know people do this sort of thing all the time, but it is agsinst the rules.
            You have the right to remain silent. Anything you say will be misquoted, then used against you.

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            This message board allows participants to freely exchange ideas and opinions on areas concerning taxes. The comments posted are the opinions of participants and not that of Tax Materials, Inc. We make no claim as to the accuracy of the information and will not be held liable for any damages caused by using such information. Tax Materials, Inc. reserves the right to delete or modify inappropriate postings.

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