buying land with IRA?

[a1cowmilker]

We have just heard that you can buy land with an existing IRA.

There are considerable restrictions, but this sounds very attractive to us for many reasons. One being we like the fact that we could buy something (a small something)without borrowing money, and hopefully always own it debt free. Also, we are just a few years from being able to use some of that IRA.
By the way, an IRA is an individual retirement account that you contribute to when you are working, but not taxed on it until you begin to use it. More or less
Anyone doing this? What do you think?

thanks,

cowmilker

[Jena]

I've used all three of my 401K's to purchase property. It's similar to an IRA. I used all of them as the downpayment on houses, which I never got to sell and ended up basically losing all that money, but that has more to do with divorce than anything.

The last one I cashed out to fix up the house I am in now. I paid a penalty on all of them, but it was worth it.

I'd be careful of putting your entire retirement money into one piece of land though, especially if you are in an area with really high inflated prices at the moment. You probably don't have time to earn it back.

Jena

[turtlehead]

I cashed in my 401K and used it to put a down payment on our land. We figured that the land is better retirement security than a 401K these days.

[BertaBurtonLake]

Originally Posted by a1cowmilker

We have just heard that you can buy land with an existing IRA.

There are considerable restrictions, but this sounds very attractive to us for many reasons. One being we like the fact that we could buy something (a small something)without borrowing money, and hopefully always own it debt free. Also, we are just a few years from being able to use some of that IRA.
By the way, an IRA is an individual retirement account that you contribute to when you are working, but not taxed on it until you begin to use it. More or less
Anyone doing this? What do you think?

thanks,

cowmilker

Could you expound on some of the "considerable restrictions" and also, could you use an inherited IRA for land purchase? Do you still have the tax liability if you use the proceeds of the IRA to purchase land?

~Berta?

[a1cowmilker]

Thanks for the responses.
I am not talking about cashing IN the IRA , I am talking about a self directed IRA that is still an IRA but instead of a certificate of deposite ( or bonds, or stocks) it is in the form of real estate.
From what little I have read you can't rent it out to your chidren ( but you can your siblings) You can't use it for a second home or benefit from it's use.(what ever THAT means). Any profit from it goes back into the IRA, and any repairs you make on it must come from an IRA. YOu don't get to keep the title on it until you redeem it.
I am asking because I would really really like to make this work. But I don't want to do it unless I hear of someone who did it and liked it.
Thanks for reading this, wouldn't it be great if this could benefit homesteaders?

[agmantoo]

a1, what you stated can be done. A "holding company" is set up and the IRA money goes into the holding. The money is then spent to buy the property and the deed is held by the holding entity. The property is then an investment held by "others". You inturn, lease the property and the proceeds are income to the investment. It is expensive to setup such an investment and the guidlines are strict to my understanding. For the purpose of buying a homestead the expenses probably outweigh the benefits and the return to the IRA negligible. A CPA can guide you through how to accomplish the feat if you want to persue the effort and expense.

[a1cowmilker]

allrighty then, from what you say, the expenses out weigh the benefit, never mind.

Why do they have to make it so dang difficult?

thanks for the info