Discussion:Real estate in Roth IRA
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Discussion Forum Index --> Tax Questions --> Real estate in Roth IRA
| 7 December 2005 | |
| Is it permitted for a real estate broker to own real estate in a Roth and have his firm sell the real estate for the self directed IRA? | |
| 8 December 2005 | |
| You cannot individual own real estate in an IRA. You can own it thru a REIT. | |
| 7 January 2006 | |
| I WOULD SUGGEST THAT YOU CONSIDER USEING A ROTH OWNED LLC WITH THE THIRD PARTY TRUSTEE AS LIBERTY TRUST IN COLORADO. THE IRA FUNDS (LIBERTY) BUYS THE MEMBERSHIP CERTIFICATE FBO OF YOUR IRA, AND THE LLC IS THE ENTITY HOLDING AND OR SELLLING THE RE. SOUNDS COMPLICATED AND IS A LITTLE, HOWEVER IT WORKS. | |
| 16 February 2006 | |
| I need a code section referance for what can and cannot be purchased with traditional IRA and ROTH IRA funds. An investor client tells me he can use his ROTH IRA account funds to purchase real estate. | |
| 16 February 2006 | |
| There is no problem with having real estate inside of a Roth IRA. The code does not prohibit the owernship of specific types of assets, except collectibles.
However, I believe that if the owner of the IRA acts as broker on the real estate sales or purchases, this would be a prohibited transaction under Sec. 4975(c)(1)(C). | |
| 16 February 2006 | |
| If a house is purchased inside a Roth IRA with IRA funds and is used as a rental property, is there a requirement the house be sold and the cash distributed out the the owner or can the house be distributed out? If the house goes out does the owner get it at fair market value? If so, how is this determined? I can't find anything specific in the regs on this. | |
| 16 February 2006 | |
| The taxpayer would recognize income equal to the fair market value of the property, and his basis would be the same. | |
| 16 February 2006 | |
| But.....distributions from a Roth Ira are tax free where the taxpayer made after tax contributions. So....if I purchase a house today inside a Roth Ira for 100,000 and sell it in six months for 150,000, and then distribute out the 150,000 in cash, is that cash tax free? Or if I distribute the house out when the fair market value of the house is 150,000 do I get the 150,000 basis to use when I eventually sell it? | |
| 16 February 2006 | |
| Don't have enough info to give you an answer. Assuming the taxpayer is over the age of 59 1/2 and the Roth has been open for at least 5-years, then the answer to both questions is yes. | |
| 17 February 2006 | |
| What is the mechanism for purchasing a house with Roth IRA funds where the funds consist of cash invested in mutual funds in a broker account? Can an individual simply take the money out of the broker account and acting as her own trustee of the funds make the purchase in her own name....or would the property be owned by an IRA Trust. Is there such a thing? | |
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