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Message
Self directed Ira real estate question
Posted on 12/10/23 at 9:22 am
Posted on 12/10/23 at 9:22 am
I currently live in a twin home, I would like to rent it out and purchase a single family home.
Is there a way to work this with a self directed Ira?
My thoughts were take out a helo on the existing for down payment on the new. Then pay off the helo with the self directed?
If anyone has any advice TIA.
Is there a way to work this with a self directed Ira?
My thoughts were take out a helo on the existing for down payment on the new. Then pay off the helo with the self directed?
If anyone has any advice TIA.
4
Posted on 12/10/23 at 10:13 am to dillpickleLSU
quote:
I currently live in a twin home,
What's a twin home?
quote:
My thoughts were take out a helo on the existing for down payment on the new. Then pay off the helo with the self directed?
How quickly would you be able to pay back/down the heloc?
Posted on 12/10/23 at 10:46 am to Billy Blanks
Duplex
Posted on 12/10/23 at 10:56 am to dillpickleLSU
My dad owns a duplex, one half in his SDIRA (no third party debt allowed) and other half with traditional mortgage.
Posted on 12/11/23 at 9:52 pm to dillpickleLSU
quote:
Then pay off the helo with the self directed?
Paying off personal debt with ira funds will be deemed a distribution.
You can’t personally have anything to do with the property owned by the self directed IRA
Posted on 12/12/23 at 7:00 am to LSUFanHouston
I can’t really wrap my head around what the benefit of this would even be. You can eliminate a lot of the taxation of your rental income already - why roll it into an IRA and have to deal with the hassle and future income taxes on the sale of the house? No step up in basis at death. No 1031. Just doesn’t seem worthwhile.
Posted on 12/13/23 at 1:24 pm to slackster
I looked into this as a diversification of my 401..
it changed they way you manage money associated with the property.. ( I have after tax rentals to compare to ) it was a while back but I recall you lose a lot of the write off and depreciation aspects of the property..
Also you need to make sure it is rented at fair market and rented to non family types..
I decided not to mess with it.. not sure how the resell is handle.. but suspect there are some hooks in there also..
Look at it full cycle and model the full cycle economics to get a feel.
it changed they way you manage money associated with the property.. ( I have after tax rentals to compare to ) it was a while back but I recall you lose a lot of the write off and depreciation aspects of the property..
Also you need to make sure it is rented at fair market and rented to non family types..
I decided not to mess with it.. not sure how the resell is handle.. but suspect there are some hooks in there also..
Look at it full cycle and model the full cycle economics to get a feel.
Posted on 12/13/23 at 2:29 pm to slackster
quote:
I can’t really wrap my head around what the benefit of this would even be
Nost people's liquid wealth is in their IRA.
If you want to own rental property without a mortgage, for most people, this is the only way.
What you do, though, is convert capital gain upon sale, to ordinary gain when the profits are eventually distributed from the IRA. Which is not smart.
Posted on 12/13/23 at 4:14 pm to dillpickleLSU
I'd have a tax attorney set it up.
Your IRA can invest in real estate but self-dealing is prohibited.
Your IRA can invest in real estate but self-dealing is prohibited.
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