I recently attended a Real Estate seminar where a Roth IRA was discussed as
a tax shelter for real estate earnings. In short....here is what was
suggested

1. Buy the real estate using a Land Trust contract naming the Roth IRA as
the trustee.
2. When selling same property.....have the check at the closing made out to
the Roth IRA (trustee).

These earning would then be considered non taxable because the transaction
was done as the IRA being the purchaser and seller of the property.

Is this possible? Do you have any details of such a transaction?

Sue Byrne

This only works if you have enough cash in the Roth IRA to buy the real estate outright (no mortgage). There are other negatives, like finding a custodian for the Roth IRA who will handle this, at a reasonable price.

Putting RE into an IRA or Qual plan results in the loss of several tax benefits that accrue to individual owners, e.g., depreciaton for developed RE and the deduction for property taxes and expenses. If the Roth owns the RE how will prop taxes be paid? Roth IRA owner cannot deduct the property taxes that owner pays because IRA is owner of the property. As BPicker noted there are few IRA custodians who will accept RE as an asset because of the liability and environmental issues and those that do charge steep fees. Also who will pay for the legal fees asociated with buying and selling the property? Also I am not sure that a custoidan would accept a Land trust contract as an asset instead of an outright fee ownership in RE.