Message Font: Serif | Sans-Serif
No. of Recommendations: 2
clawdebtcoldbeer: "Maybe this is a dumb idea, but . . .

I recently purchased a condo, and have very little equity (less than $10,000 on a $265,000 property -- no I don't pay PMI, don't ask).

My question: If I converted my ownership in the condo to shares (via a realty trust or something) and contributed my equity to a Roth up to the max every year, could I put the entire property (at its current very low value) in the Roth and not pay CG tax when I sell the condo?

I'm sure this is a very bad idea, just not sure why. There are probably state recording requirements also, but I haven't looked into them."

First, you would need to find a trustee that is willing to own real estate for you.

Second, there is no personal use permitted of IRA owned real estate, and the IRA cannot be a debtor on a mortgage and the IRA must pay operating expenses.

Third, all you can contribute to an IRA is cash. The IRA could purchase an interest (ASSUMING THAT YOU DID NOT RUN AFOUL OF RELATED PARTY RULES), but it would have to be at FMV not at some arbitarily low rate.

I believe that this will never fly.

Regards, JAFO

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.