The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: placing RE in an IRA Date:  4/9/2011  10:53 PM
Author:  Wradical Number:  113041 of 127617

Can someone buy a house across the street and put it in an IRA?
Is it hard to find a custodian who would allow that?

It should be impossible. Contributions to an IRA, other than a rollover, must be in cash.

How about doing it with mineral interests?
Same thing.

Or could one create an LLC that owns minerals/real estate and
then the IRA invests in the LLC shares?

That you can do - BUT - your custodian/trustee has to agree to go along with the LLC interests, which wouldn't be a listed security, etc.

Of course there are plenty of publicly-traded limited partnerships out there that deal in real estate and oil/gas/mineral properties.

But the problem is that if it's debt-financed property, then the income from it - including any gain on sale - is Unrelated Business Taxable Income (UBTI) and subject to tax at corporate rates, even though it's inside an IRA. Which kind of kills the purpose for doing it. So you would have to do the deal with all- equity investment, to have it make sense. And then find a trustee/custodian who would go along with it.

Easier to just buy shares in a REIT or mutual fund focused on real estate. Your IRA can always do that.

Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us