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Author: clawdebtcoldbeer Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: House in Roth? Date: 10/6/2003 4:16 PM
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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.
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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67087 of 121572
Subject: Re: House in Roth? Date: 10/6/2003 4:36 PM
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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




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Author: foobarista Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67090 of 121572
Subject: Re: House in Roth? Date: 10/6/2003 7:59 PM
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The other thing is if your condo is your primary residence,
you don't have to pay cap gains taxes anyway if you live in
it for two years, up to $250,000, $500K if married filing
jointly.

Note that even if you did, you'd only pay cap gains taxes on
profit, which crudely means sale price minus sale fees/RE
commissions minus your "basis", typically the price you paid.

So, if you bought your condo for $250K, and sold it for $550K,
only ($50K - RE commissions) would be subject to cap gains tax.

(Naturally, std disclaimers apply, read relevant tax documents,
etc.)

--Foobarista

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Author: TheBreeze Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67111 of 121572
Subject: Re: House in Roth? Date: 10/8/2003 7:28 AM
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Why put home/condo ownership into a tax-advantaged vehicle? If you meet the requirements (income, owned the property as your "home" long enough), the gain is free from taxes anyway. Otherwise, it's going to be taxed at a favorable capital-gains rate (probably).

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