Roth IRA

i think you can do both brah

Did a little more research on this, depending on the details you might face much worse than just losing a tax break. For certain "prohibited transactions" the *entire* IRA is immediately regarded as a regular account. It is just as if you had withdrawn all your money, put it in a regular account and *then* made the transaction.

That means if you're under 59 1/2 you pay early withdrawal fees. Everything becomes taxable, even the portion you had invested in something completely legit. Very bad stuff.

Generally speaking, an investment where you are personally involved with how the investment gets earnings is prohibited no matter how carefully you arrange things. If you buy someone else's property in your IRA, hire a contractor to fix it up, and then resell it using a realtor, that may be okay. But if you hang one door or sell it yourself, your entire IRA is nuked from that point forward. You (likely) owe early withdrawal fees on the full amount, everything is now taxable, etc.

Better to buy a REIT.

thanks for the info

well in theory you would set up a mortgage finance company that makes just under fifty thousand in each fiscal year and pays taxes at the 15% rate. That company would pay dividends to the roth. Then you would finance your home/investments with the company therefore deducting interest as an expense but not as income when you retire.

It is way complicated stuff, way past entity selection. It seemed to good to be true though and from the other poster it most likely is something a taxpayer would not get away with in the long-term.