| |
You are here: Experts > People/Relationships > Retirement Planning > Retirement Planning > Roll over into real estate
Expert: David M Iannopollo - 11/4/2009
Question
Hi David
I have funds totaling approximately $350,000 in 401Ks 403Bs, IRAs etc. These are my personal funds. My husband has his own funds. My husband and I own two homes on the same undividable lot in a very affluent university town in northern CA. We live in one house and rent out the guest cottage for just less than have the mortgage. Since we rent out one house, and will never live it, can I purchase one of the houses using funds rolled over into an IRA to free up those funds to purchase a house elsewhere? I have a job offer in another city and would like to buy a house near my place of employment and am looking at options to make this happen. I would appreciate any direction you can provide.
Answer
Hi Keri,
Purchasing real estate inside of an IRA requires you to open a "self directed IRA". This is not something I deal with and you would have to find a custodian that handles these. So I probably can't give you a definitive answer but I will share some views.
I think what you are asking me if if you can use IRA funds to purchase real estate. You can if the property is not your residence. As you already own these homes you may run into a problem. I do know that the IRS is very particular in regards to these types of IRA's where real estate is involved so one small mistake could put you into deep trouble. They can also be quite expensive to set up.
Although at face value it sounds like a good idea I would normally advise against it. Besides facing the scrutiny of the IRS I don't feel it's a good idea to own a non-liquid asset in a retirement account.
You may want to consider consolidating as much of your mortgages as possible on the new residence to provide the greatest mortgage interest deduction.
If you really are interested in doing this, I would suggest that you find a custodian who handles this type if account and get an experts advice. I hope this helps!
Dave
diannopollo@twcny.rr.com
Add to this Answer Ask a Question
|
|
