Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (261571)	7/16/2010 5:03:17 PM
From: neolib	Read Replies (2) \| Respond to of 306849

what if you actually worked the land, as in farmed* it? would that be considered your own use?* Its a bit murky, but AFAIK you can indeed do so. The more common thing I've seen is people buying rental properties which they manage themselves. They literally have a checkbook from the IRA for paying expenses, and all income must be deposited directly to the IRA account. The custodian does not snoop about the validity of any of these transactions. They just do the balance reporting annually to the Feds. The fact that you are putting sweat equity in, rather than the investment itself does not appear to be challenged. The rules have evolved. It used to be that you could only invest in enterprises which were managed by an unrelated person. The approach now is to set up an LLC, and the LLC can own about anything. You are still prohibited from all the self-dealing situations. So you can't buy property from yourself, like trying to convert a home you own into one that is owned by your IRA. There is an approach that I've looked at however, which is I'd like to buy property in Hawaii to grow tropical trees. I'd also like a vacation home there. So you structure the purchase as an undivided interest, where you pay for xx% privately, and the rest in your IRA, with the private part demarcated where you want your house. If you do it via a Roth IRA, when you reach retirement age, you can take the distribution in kind tax free. So my stunt would be to grow trees, harvest the lumber through retirement within the ROTH, then take the income out tax free and also take the land out as in kind distribution so I end up owning the land outside the IRA in the end. Always some risk they change the rules part way through.