Tax Help IRA LLC

General Real Estate Investing
1

Last year I did an early withdrawl from my older IRA account and my spouse older 401K account to buy a property abroad. As a result of the early withdrawal I have lost close to 13K in taxes as my income for last year got bumped up. ( 13 K = instead of 8K in refund I owed 5 K)

The deal fell through as the sellers decided not to sell.I am getting my money back. I want to start investing that money in realestate / venture into real estate investion in the US. How can I recoup the losses incurred in my taxes . This there a way I can move the money to a IRA LLC account and file an refile my taxes.

Please help. I appreciate any help in this matter.

Thanks

2

Too late to repay your IRA (60 day limit I believe), so you’re out of luck on that one. If you were purchasing your first home, though, you could avoid the 10% penalty for early withdrawal.

3

Thanks MCWager

I was thinking more of directing the withdrawla to Self directed IRAs. Would this be possible ?

4

since you can’t get it back into the IRA, you can’t have a self-directed one.

5

Technically, can’t you put the money into your IRA has a regular contribution (assuming you qualify)? Then you’d get the tax deduction for the contribution. You’re stuck on the withdrawal penalty.

Once the money is in the IRA, you can get a self-directed IRA and invest in real estate. There are laws about doing it in a LLC though. You can’t mix IRA and non-IRA funds. If you’re younger then I’d rather pay taxes now and do it through a self-directed Roth IRA since your gains should be big by the time you retire.

Now, if you do a C-corp you can use the self-directed IRA or Roth IRA to buy shares of your own company. Then the company can do whatever it wants with that cash (combine it with non-IRA funds). Then the shares and any dividends paid on them must remain in the IRA or Roth IRA.

6

I thnk he’s stuck trying to get the money that he withdrew back into the IRA. Can’t do that after the 60 days.

He can put it into a self directed Roth for 2006 (assuming he qualifies) and then go with that. However, he won’t be able to combine the regular IRA and new Roth to do a single investment.

No reason why you can’t do two self directed IRA’s though and invest from both, just not in the same property.

7

Yeah. I was thinking his withdrawal was $13k but the taxes were $13k. He can put part of it back as his contribution for this year to the IRA. That’ll help a little.

You should talk a CPA. You may also be able to do something with a C-corp and your own retirement benefit from the C-corp. I’m not sure what the guidelines are they but there’s always “company matching”.

8

Thanks , I closed two IRA accounts totalling about 35 K from IRA and my loss in taxes were about 13K. Instead of getting a 8 K refund if Ihad not done this I paid 5 K in taxes.

THanks for all your advice