I have money in an IRA and am looking to pull it out and invest in Foreclosure’s with a company. The home will be managed by a property management company. Is there any way to avoid paying the out of control taxes on it. Please help
Set up a self directed IRA and direct the custodian to invest the money in this opportunity. Assuming you don’t engage in a prohibited transaction, no taxes are due until you make withdrawals from the IRA when you retire.
is there any such way that you can just roll it over to an investment company that does REI’s and skip being taxed the 33%. I do not want it just sitting there collecting virtually nothing when I could make 18-20% off of it. Hopefully this makes since in the plan I am trying to go forward with.
You can transfer your current IRA to the new custodian without paying taxes. Once it’s with the custodian, you can direct him to invest in whatever you want with few exceptions.
My personal opinion is to create an LLC and direct the custodian to invest everything in it. You then make investments as you see fit. This set up has 2 main advantages. The first is that you don’t wait on the custodian to process your investment request, which can take a month or more, meanwhile you lose the deal. The second is that it minimizes the asset fees. Many custodians charge a quarterly fee based on the number of investments. If you have 3 investments, you pay 3 fees. If you have 1 LLC that makes 3 investments, you only pay 1 fee. The only downside is drafting the operating agreement. The guru DYI kits are not valid for this type of LLC and should never be used. I also suggest you avoid a custodian that charges a percentage of the assets as the annual fee. That gets very expensive when the value is a few hundred thousand and you do all the work. Stick with a fee based custodian.
thanks so much for the information
Was reading your ad and wanted to ask, what city/state are you in? I suggest you form a Corporation, and guess who would be CEO? You guessed, “You.” Invest in learning the benefits of owning your own Corporation. I noticed you would be happy earning under 20% return on your money. How about 35%! I buy, fix and sell homes and condos, short term investments. You can act as a Lender using your Corporation and secure your investment through a Trust Deed. If you don’t already, get you a seasoned Accountant to show you the priviledge of taxing low taxes on earned income, just like the wealthy do. Unfortunately, the poor and middle class pay more taxes than the rich. Why? Because they form Corporations. Contact me as I am seeking investors who have an IRA or 401k or pension fund that making very little return. Real estate is still the best investment on the planet and always will be. Now is the time Professional Real Estate Investors dream of, because inventory can be purchased below market value and sometimes dirt cheap. There are in my city lots of deals that make money. I just missed one, a 2 bd/2 ba condo in a very desiring area for $275,000. To make it look like new, the renovation would be approximately $40,000. That’s $315,000 total investment. This condo could sell very quickly for $575,000, over $200,000 profit. These are the type of investments that I am taking part in and need investors to work with me. Let me know your thoughts!
I would be hesitant to suggest investing your IRA in a company that you own/control. While “technically” allowed, this is perilously close to creating a disallowed transfer.
In fact, my self-directed IRA custodian will not allow such transfers without a Private Letter Ruling from IRS (letter from IRS stating that they have reviewed the plan and agree that it’s ok. painful, difficult and expensive to get.)
The penalty for having a transfer disallowed is that the IRA is considered fully distributed and the entire balance is injected into taxable income for the year the transfer occurred. Plus any early distribution penalties. Plus any penalties/interest for underpayment of taxes if it happened in a prior year (there is no time limit for how far back they can go once the transfer is “discovered.”)
Having your IRA busted is…ah…uhm… “undesirable.”