Guest nealjpc Posted March 11, 2011 Posted March 11, 2011 Here is my problem. The house that I live in now will be taken by eminant domain. I don't know exactly when they are going to purchase my property. Probably 2 to 3 years. Through a death in my family my nephew's house is for sale and is Ideal for my new home . His estate wants to sell now. I have enough money in my IRA to purchase it through a self directed IRA LLC, which is legal. I know that I can't live in the new house as long as it is owned by the LLC. I can inprove it and also rent it out which I probably won't do. Now when the state buys my property say in 3 years. I need to know if I can legally purchase it back from the LLC without paying full income tax all at once. In other words I want to put all my money back to the IRA LLC. I was told this couldn't be done. Does anyone know if this can be done.
ESOP Guy Posted March 11, 2011 Posted March 11, 2011 Go the www.irs.gov. Search for publication 590. Read about Prohibited transactions in that publication. It should pretty clear why you can’t do what you want.
Guest Sieve Posted March 11, 2011 Posted March 11, 2011 You cannot purchase assets from your own IRA without making application for a prohibited transaction exemption. The IRA can, however, sell the assets to a disinterested 3rd party in an arm's length transaction--but that will not accomplish your golsl (without taking an end-run around the pruchase/sale prohibition mentioned).
J Simmons Posted March 12, 2011 Posted March 12, 2011 What do you mean by "IRA LLC"? John Simmons johnsimmonslaw@gmail.com Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.
Guest nealjpc Posted March 12, 2011 Posted March 12, 2011 What do you mean by "IRA LLC"? It is a self directed IRA Company which you can direct and purchase real estate as investments.
Guest nealjpc Posted March 12, 2011 Posted March 12, 2011 You cannot purchase assets from your own IRA without making application for a prohibited transaction exemption. The IRA can, however, sell the assets to a disinterested 3rd party in an arm's length transaction--but that will not accomplish your golsl (without taking an end-run around the pruchase/sale prohibition mentioned). How do you make the application for a prohibited transaction exemption ?
Guest Sieve Posted March 12, 2011 Posted March 12, 2011 You'll no doubt need an attorney to help you with it, but here is a link to the EBSA website which explains the gist of the procedure: http://www.dol.gov/ebsa/regs/PTE_procedures.html#section1
Guest Rajeev Posted April 10, 2011 Posted April 10, 2011 As indicated there is the option of getting a Prohibited Transaction Exemption.... but the other solution would be for you to take an early distribution in-kind from your IRA for the property (paying all the taxes, penalties, etc.) which will thereby allow you to live in the property, but that would take funds away from your retirement, and that does not appear to be the goal based on what you have stated here.... Of course knowing your age, this option may have different impacts and benefit and of-course recommendations...
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