scheming concept for good deal

[scaredyclassic]

one can clearly borrow against 401k accts for a down payment; is this what you’re talking about with IRAs

[clearfund]

Scaredycat, not talking about borrowing from your IRA in this case.

Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

In a 401k you are taking a loan against the account and it must be repaid with interest.

For this thread, I am discussing making a real estate loan from my IRA to a 3rd party exactly like a bank makes a loan. It would be a 1st trust deed, secured against the house, have terms/maturities/interest all just like a bank loan. its a nice way to add secured income to an IRA in a tax free manner (remember interest is taxed as ordinary income which is the highest rates).

The rub is that I cannot make a loan from my IRA to a ‘related party’ which is myself, wife, family, business, or any person/entity that I have a ownership entity in. it must be a 3rd party like you, or anyone else on this blog, or in the world.

Thus, conceptially, we’re debating whether I could loan you $100k from my IRA at a minimal interest rate, and you could loan me $100k at a minimal interest rate and it would wash out as a very cheap loan.

Lastly, it is simple to convert/rollover your current 401k/iras to a self-directed IRA at a custodian who specializes in this. However, while it is easy, there are very specific rules on how to do it (and it is a very viable option for most people (but not all) once they learn the details). I’ve worked with the 4 largest custodians and clients have been transacted over $200mm of real estate from their IRAs which they never would have been able to do from their personal accounts.

Be sure to get solid advice on your own situation from your advisors!

[clearfund]

Scaredycat, not talking about borrowing from your IRA in this case.

Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

In a 401k you are taking a loan against the account and it must be repaid with interest.

For this thread, I am discussing making a real estate loan from my IRA to a 3rd party exactly like a bank makes a loan. It would be a 1st trust deed, secured against the house, have terms/maturities/interest all just like a bank loan. its a nice way to add secured income to an IRA in a tax free manner (remember interest is taxed as ordinary income which is the highest rates).

The rub is that I cannot make a loan from my IRA to a ‘related party’ which is myself, wife, family, business, or any person/entity that I have a ownership entity in. it must be a 3rd party like you, or anyone else on this blog, or in the world.

Thus, conceptially, we’re debating whether I could loan you $100k from my IRA at a minimal interest rate, and you could loan me $100k at a minimal interest rate and it would wash out as a very cheap loan.

Lastly, it is simple to convert/rollover your current 401k/iras to a self-directed IRA at a custodian who specializes in this. However, while it is easy, there are very specific rules on how to do it (and it is a very viable option for most people (but not all) once they learn the details). I’ve worked with the 4 largest custodians and clients have been transacted over $200mm of real estate from their IRAs which they never would have been able to do from their personal accounts.

Be sure to get solid advice on your own situation from your advisors!

[clearfund]

Scaredycat, not talking about borrowing from your IRA in this case.

Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

In a 401k you are taking a loan against the account and it must be repaid with interest.

For this thread, I am discussing making a real estate loan from my IRA to a 3rd party exactly like a bank makes a loan. It would be a 1st trust deed, secured against the house, have terms/maturities/interest all just like a bank loan. its a nice way to add secured income to an IRA in a tax free manner (remember interest is taxed as ordinary income which is the highest rates).

The rub is that I cannot make a loan from my IRA to a ‘related party’ which is myself, wife, family, business, or any person/entity that I have a ownership entity in. it must be a 3rd party like you, or anyone else on this blog, or in the world.

Thus, conceptially, we’re debating whether I could loan you $100k from my IRA at a minimal interest rate, and you could loan me $100k at a minimal interest rate and it would wash out as a very cheap loan.

Lastly, it is simple to convert/rollover your current 401k/iras to a self-directed IRA at a custodian who specializes in this. However, while it is easy, there are very specific rules on how to do it (and it is a very viable option for most people (but not all) once they learn the details). I’ve worked with the 4 largest custodians and clients have been transacted over $200mm of real estate from their IRAs which they never would have been able to do from their personal accounts.

Be sure to get solid advice on your own situation from your advisors!

[clearfund]

Scaredycat, not talking about borrowing from your IRA in this case.

Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

In a 401k you are taking a loan against the account and it must be repaid with interest.

For this thread, I am discussing making a real estate loan from my IRA to a 3rd party exactly like a bank makes a loan. It would be a 1st trust deed, secured against the house, have terms/maturities/interest all just like a bank loan. its a nice way to add secured income to an IRA in a tax free manner (remember interest is taxed as ordinary income which is the highest rates).

The rub is that I cannot make a loan from my IRA to a ‘related party’ which is myself, wife, family, business, or any person/entity that I have a ownership entity in. it must be a 3rd party like you, or anyone else on this blog, or in the world.

Thus, conceptially, we’re debating whether I could loan you $100k from my IRA at a minimal interest rate, and you could loan me $100k at a minimal interest rate and it would wash out as a very cheap loan.

Lastly, it is simple to convert/rollover your current 401k/iras to a self-directed IRA at a custodian who specializes in this. However, while it is easy, there are very specific rules on how to do it (and it is a very viable option for most people (but not all) once they learn the details). I’ve worked with the 4 largest custodians and clients have been transacted over $200mm of real estate from their IRAs which they never would have been able to do from their personal accounts.

Be sure to get solid advice on your own situation from your advisors!

[clearfund]

Scaredycat, not talking about borrowing from your IRA in this case.

Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

In a 401k you are taking a loan against the account and it must be repaid with interest.

For this thread, I am discussing making a real estate loan from my IRA to a 3rd party exactly like a bank makes a loan. It would be a 1st trust deed, secured against the house, have terms/maturities/interest all just like a bank loan. its a nice way to add secured income to an IRA in a tax free manner (remember interest is taxed as ordinary income which is the highest rates).

The rub is that I cannot make a loan from my IRA to a ‘related party’ which is myself, wife, family, business, or any person/entity that I have a ownership entity in. it must be a 3rd party like you, or anyone else on this blog, or in the world.

Thus, conceptially, we’re debating whether I could loan you $100k from my IRA at a minimal interest rate, and you could loan me $100k at a minimal interest rate and it would wash out as a very cheap loan.

Lastly, it is simple to convert/rollover your current 401k/iras to a self-directed IRA at a custodian who specializes in this. However, while it is easy, there are very specific rules on how to do it (and it is a very viable option for most people (but not all) once they learn the details). I’ve worked with the 4 largest custodians and clients have been transacted over $200mm of real estate from their IRAs which they never would have been able to do from their personal accounts.

Be sure to get solid advice on your own situation from your advisors!

[Coronita]

[quote=clearfund]I too am unsure as to the technical aspects of this either, just seems to fit the macro rules.

I’ve done over 1,000 self directed IRA real estate/Trust Deed transactions for our clients and I don’t see any red flags.

I’ll ask our rep at a couple of the big IRA custodians we work with if this would be 1) legit if explained in detail to the IRS, and 2) if they would ever connect the dots on their own (considering the gov’s history of ‘connecting the dots’ it is unlikely).

I’ll post here if I get any solid info either way.[/quote]

Bump any updates?

[Coronita]

[quote=clearfund]I too am unsure as to the technical aspects of this either, just seems to fit the macro rules.

I’ve done over 1,000 self directed IRA real estate/Trust Deed transactions for our clients and I don’t see any red flags.

I’ll ask our rep at a couple of the big IRA custodians we work with if this would be 1) legit if explained in detail to the IRS, and 2) if they would ever connect the dots on their own (considering the gov’s history of ‘connecting the dots’ it is unlikely).

I’ll post here if I get any solid info either way.[/quote]

Bump any updates?

[Coronita]

[quote=clearfund]I too am unsure as to the technical aspects of this either, just seems to fit the macro rules.

I’ve done over 1,000 self directed IRA real estate/Trust Deed transactions for our clients and I don’t see any red flags.

I’ll ask our rep at a couple of the big IRA custodians we work with if this would be 1) legit if explained in detail to the IRS, and 2) if they would ever connect the dots on their own (considering the gov’s history of ‘connecting the dots’ it is unlikely).

I’ll post here if I get any solid info either way.[/quote]

Bump any updates?

[Coronita]

[quote=clearfund]I too am unsure as to the technical aspects of this either, just seems to fit the macro rules.

I’ve done over 1,000 self directed IRA real estate/Trust Deed transactions for our clients and I don’t see any red flags.

I’ll ask our rep at a couple of the big IRA custodians we work with if this would be 1) legit if explained in detail to the IRS, and 2) if they would ever connect the dots on their own (considering the gov’s history of ‘connecting the dots’ it is unlikely).

I’ll post here if I get any solid info either way.[/quote]

Bump any updates?

[Coronita]

[quote=clearfund]I too am unsure as to the technical aspects of this either, just seems to fit the macro rules.

I’ve done over 1,000 self directed IRA real estate/Trust Deed transactions for our clients and I don’t see any red flags.

I’ll ask our rep at a couple of the big IRA custodians we work with if this would be 1) legit if explained in detail to the IRS, and 2) if they would ever connect the dots on their own (considering the gov’s history of ‘connecting the dots’ it is unlikely).

I’ll post here if I get any solid info either way.[/quote]

Bump any updates?

[SK in CV]

[quote=clearfund]
Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

[/quote]

This isn’t exactly right. It is not a loan at all, it’s a penalty free withdrawal. A taxpayer in the 28% tax bracket will only net $7,200 (ignoring state taxes for the moment). A pretty costly way to acquire a home, and at least with our local prices, it doesn’t really help much with the acquisition. So you’re right on the last part. It isn’t a miracle. It’s likely to be somewhere between $7000 and $8500 that costs you $10,000. Loan shark kind of cost. Pretty high vig for your own money.

And there are other requirements. It has to be for the purchase of a first home.

[SK in CV]

[quote=clearfund]
Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

[/quote]

This isn’t exactly right. It is not a loan at all, it’s a penalty free withdrawal. A taxpayer in the 28% tax bracket will only net $7,200 (ignoring state taxes for the moment). A pretty costly way to acquire a home, and at least with our local prices, it doesn’t really help much with the acquisition. So you’re right on the last part. It isn’t a miracle. It’s likely to be somewhere between $7000 and $8500 that costs you $10,000. Loan shark kind of cost. Pretty high vig for your own money.

And there are other requirements. It has to be for the purchase of a first home.

[SK in CV]

[quote=clearfund]
Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

[/quote]

This isn’t exactly right. It is not a loan at all, it’s a penalty free withdrawal. A taxpayer in the 28% tax bracket will only net $7,200 (ignoring state taxes for the moment). A pretty costly way to acquire a home, and at least with our local prices, it doesn’t really help much with the acquisition. So you’re right on the last part. It isn’t a miracle. It’s likely to be somewhere between $7000 and $8500 that costs you $10,000. Loan shark kind of cost. Pretty high vig for your own money.

And there are other requirements. It has to be for the purchase of a first home.

[SK in CV]

[quote=clearfund]
Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

[/quote]

This isn’t exactly right. It is not a loan at all, it’s a penalty free withdrawal. A taxpayer in the 28% tax bracket will only net $7,200 (ignoring state taxes for the moment). A pretty costly way to acquire a home, and at least with our local prices, it doesn’t really help much with the acquisition. So you’re right on the last part. It isn’t a miracle. It’s likely to be somewhere between $7000 and $8500 that costs you $10,000. Loan shark kind of cost. Pretty high vig for your own money.

And there are other requirements. It has to be for the purchase of a first home.

[Author]

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