Posted by Greg on August 08, 2003 at 08:19:44:
EXACTLY! I couldnt have put it any better Mo!
Thanks. In my mind, there is no principle AND there is no income, it is strictly rental payments (income to IRA) that will totally be deposited in my IRA!
IRA RE purchase, clean as possible, I think - Posted by greg
Posted by greg on August 06, 2003 at 18:38:52:
I think this is a simple and legal approach but I cant seem to get anyone to agree. I want to purchase a condo with every dollar coming out of my IRA, no leverage, no outside funding, just IRA monies. Paid in full with deed put into my IRA. Then, I want to offer this condo for sale at a higher price due to “no money down” and set a 30 year mtge. in place at some decent percentage. ALL PAYMENTS from the new buyer would go directly to my IRA without going through me. Is this legal and will it work and will I have to pay this UBTI on anything since it is not leveraged and totally done within my IRA?
Thanks in advance, Greg
Re: IRA RE purchase, clean as possible, I think - Posted by DavidMc
Posted by DavidMc on August 06, 2003 at 20:06:47:
Greg,
What you want to do is perfectly legal. If you have not already found it the place many people use to do this exact thing is www.trustetc.com. The real question is does thing transaction make sense to you? Would you be better off buying two condo’s, putting 50% down each, and selling on a land contract?
Re: IRA RE purchase, clean as possible, I think - Posted by greg
Posted by greg on August 07, 2003 at 08:35:13:
David,
I have some of my IRA with them already, the problem is they even tell me via phone that you cannot use IRA funds for partial/leverage down payment with the rest coming from conventional sources. So even ET doesnt seem to know the right answer, it depends who you talk to…
Yeah … - Posted by JP
Posted by JP on August 06, 2003 at 22:14:20:
If you have any extra profits at the end of the year, just make a big payment to pay down the principle on the loans … thus you have no income and no UBIT. And as long as the loan is paid off 1 year before you sell, you have no UBIT there either. If it’s a long term plan, think about it … =)
Re: Yeah … - Posted by Greg
Posted by Greg on August 07, 2003 at 08:33:05:
JP,
What you’re saying here is if I did buy one condo, pay it off in total from IRA funds, it would fit your comment about “paying off the principle” because there would be no loan balance, therefore, you are saying there would be no UBIT!??
Re: Yeah … - Posted by JP
Posted by JP on August 07, 2003 at 09:33:20:
If you do not use financing to acquire the house i.e. you pay all cash, the only thing you have to “worry” about is income at the end of the year being subject to UBIT. However, if you do as I suggested and use any extra income to paydown the principle at the end of the year, you will not have any net income (actually anything less than $1000 is fine) and thus nothing is subject to UBIT.
Re: Yeah … - Posted by mo
Posted by mo on August 07, 2003 at 18:53:15:
I might not be understanding this correctly, but if you pay all cash for the property, what principle is there to pay down at the end of the year?