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Message
Buying rental property with 401K or IRA
Posted on 3/27/23 at 5:12 pm
Posted on 3/27/23 at 5:12 pm
Building a new house and trying to sell current house. Traffic has seemed to come to halt on house sales. Was wondering if the following plan is doable:
Sell current house to IRA or 401K for $299,000.00
Turn house into rental for 2 or more years at $3,000.00 per month.
When market or interest rates get better sell house and put money back into the market.
Trying to get money for house and avoid capital gains taxes when I sell it later. Profits are planning on being put into new construction house.
What are opinions on this plan?
Sell current house to IRA or 401K for $299,000.00
Turn house into rental for 2 or more years at $3,000.00 per month.
When market or interest rates get better sell house and put money back into the market.
Trying to get money for house and avoid capital gains taxes when I sell it later. Profits are planning on being put into new construction house.
What are opinions on this plan?
5
Posted on 3/27/23 at 5:42 pm to Plasticwood
I think you should consult with Fat Bastard for some advice here.
Posted on 3/27/23 at 9:01 pm to Plasticwood
In this scenario your IRA would own the house? Would that mean if anything happens to someone in the property, they could go after your entire IRA portfolio? And since you own the IRA, they could then go after you and all of your other assets?
And that doesn’t get into the legality of not being able to sell your personal residence to your personal IRA. In other words, trying to sell your house to yourself
And that doesn’t get into the legality of not being able to sell your personal residence to your personal IRA. In other words, trying to sell your house to yourself
Posted on 3/28/23 at 8:58 am to Plasticwood
One of the most common prohibited transactions is known as self- dealing, which is when the IRA owner attempts to do business with themselves. This isn’t allowed. You can’t buy or sell property to yourself.
Posted on 3/28/23 at 9:10 am to Plasticwood
You can use a self directed IRA to buy properties, but you couldn't do what you described with it (buy and sell to yourself).
Posted on 3/28/23 at 9:24 am to Aubie Spr96
quote:
You can use a self directed IRA to buy properties, but you couldn't do what you described with it (buy and sell to yourself).
Posted on 3/28/23 at 9:27 am to Plasticwood
quote:
Building a new house and trying to sell current house.
When are you building?
quote:
Traffic has seemed to come to halt on house sales
Are you actually on the market or just reading some national news that may not apply fully to your market?
quote:
Turn house into rental for 2 or more years at $3,000.00 per mon
What's your rate? You can do this today.
quote:
When market or interest rates get better sell house and put money back into the market.
How much better are you needing? They aren't going to 2-4 in most likely our lifetimes.
quote:
Trying to get money for house and avoid capital gains taxes when I sell it later.
How much is the estimate proceeds? If you've been in for two years, you likely have none to very little in cap gains. How long have you lived there?
quote:
Sell current house to IRA or 401K for $299,000.00
No
This post was edited on 3/28/23 at 9:27 am
Posted on 3/29/23 at 6:19 am to Billy Blanks
Should be finished in about 6 weeks
Been on the market for 15 days with no activity.
Currently 5%
What ever gets real estate moving again
Looking at about $200,000.00 in proceeds
Been here for 5 years.
Been on the market for 15 days with no activity.
Currently 5%
What ever gets real estate moving again
Looking at about $200,000.00 in proceeds
Been here for 5 years.
Posted on 3/29/23 at 8:37 am to Plasticwood
quote:
Looking at about $200,000.00 in proceeds
Been here for 5 years.
If it's your primary home, not a second home, you will owe $0 in taxes.
Posted on 3/29/23 at 8:37 am to Plasticwood
quote:
Been on the market for 15 days with no activity.
Priced way too high. That's the market telling you. Are you listed or by owner?
Posted on 3/29/23 at 6:30 pm to Plasticwood
Two important things to keep in mind.
If the house you are selling has been your primary for the last five years, you have 3 years to sell once you sign closing on the new house w/o cap gains. So if you can pay both, that’s an option.
If you can’t pay both, you can rent it out for up to three years and still meet the primary test - the issue hear is that you must depreciate the property and when you do sell, that depreciation will be recaptured in cap gains.
Food for thought.
If the house you are selling has been your primary for the last five years, you have 3 years to sell once you sign closing on the new house w/o cap gains. So if you can pay both, that’s an option.
If you can’t pay both, you can rent it out for up to three years and still meet the primary test - the issue hear is that you must depreciate the property and when you do sell, that depreciation will be recaptured in cap gains.
Food for thought.
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