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Started By
Message
401k to investment property
Posted on 2/10/23 at 1:36 pm
Posted on 2/10/23 at 1:36 pm
Has anyone taken an old 401k and transfered it to a real estate retirement?
How hard is it to do?
If housing falls 15-20% in the next year it might be a possibility. I know the income has to be saved in an account but don't know much beyond that.
How hard is it to do?
If housing falls 15-20% in the next year it might be a possibility. I know the income has to be saved in an account but don't know much beyond that.
5
Posted on 2/10/23 at 4:54 pm to BHTiger
Self Directed IRA is the answer you're looking for. You can roll a 401K over to it and contribute money to it just like a traditional IRA. Only difference is, you can use the vehicle to invest in non-traditional assets like property. There are some catches, but you should be able to find an advisor to walk you through it.
I rolled half of an old 401K over to one and bought some rental properties post 2008 crash. It's been a good move so far.
This is the Company I Use
I rolled half of an old 401K over to one and bought some rental properties post 2008 crash. It's been a good move so far.
This is the Company I Use
This post was edited on 2/10/23 at 4:55 pm
Posted on 2/10/23 at 5:13 pm to BHTiger
Be careful about UBIT. That sneaks up on a lot of people.
But yeah, you can do that.
But yeah, you can do that.
Posted on 2/10/23 at 5:52 pm to LSUFanHouston
Thats good to know. Just looked up '22 UBIT rates and found 35+% on anything over $9151. Jeez, that's steep. Do I understand correctly that in an IRA any portion of real estate purchased with debt is subject to UBIT? If so, seems like that minimizes the leveraged advantage of real estate investing. Is the idea to buy properties outright or do people just absorb the UBIT bill? Can you still take advantage of real estate depreciation in IRA?
This post was edited on 2/10/23 at 5:53 pm
Posted on 2/10/23 at 6:09 pm to Aubie Spr96
Thanks for the information!
Posted on 2/11/23 at 6:23 am to TorchtheFlyingTiger
I just opened a sdira. My custodian told me any portion that is leveraged has to be purchased with a non-recourse loan and that portion of the income is subject to ubit. However, if you run your numbers you may be able to offset some or all of that with depreciation, maintenance, etc.
Posted on 2/11/23 at 8:28 pm to BHTiger
im a complete novice here so bear with me. If I rolled $300K from an old IRA over into a self directed IRA and used that to purchase a rental, what happens with the monthly rent? Is that just taxed as income at my normal income bracket? Can I put that money back into the IRA and defer the taxes?
Ive never heard of this before but it sounds interesting
Ive never heard of this before but it sounds interesting
Posted on 2/11/23 at 9:05 pm to 7flat
quote:
I just opened a sdira. My custodian told me any portion that is leveraged has to be purchased with a non-recourse loan and that portion of the income is subject to ubit.
shoulda got a solo401k. no ubit for me
Posted on 2/12/23 at 12:08 am to BHTiger
You can buy property in a self directed IRA, but it must be managed by a 3rd party and you can't use it a few nights a year for personnel use. Rules n shite...
ETA - I looked into it, but ended up selling a rental and doing a 1031xchange to buy rural property.
ETA - I looked into it, but ended up selling a rental and doing a 1031xchange to buy rural property.
This post was edited on 2/12/23 at 12:25 am
Posted on 2/12/23 at 7:41 am to BHTiger
If you do this…make sure to use a good administrator. My FIL had one that was shady AF and was a pain in the arse to deal with after he passed. They let him take a loan out to start an LLC ( big no no) but then wouldn’t let the estate pay off the loan to close the account. We had to get an attorney to just close his account 3 months after he passed while they kept charging fees.
On the other hand, I have a friend that also did this and it’s worked out very well. Just make sure you have a good accountant that can tell what you can and can’t do under the tax regs.
On the other hand, I have a friend that also did this and it’s worked out very well. Just make sure you have a good accountant that can tell what you can and can’t do under the tax regs.
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