Hello fellow BPers,
My husband and I have been dedicated podcast listeners - and savers - for the last couple years. He is originally from Germany and we've been presented with a great opportunity to take over one of his parents’ homes as a “gift” or possibly a small price (later discussed). We've have worked out a payment structure that everyone is pleased with. We’ll be renovating the home for use as a Vacation Rental as they are located in a beautiful area of Germany’s wine country.
Rewind to three years ago: we contributed 5k to a traditional IRA two consecutive years. We pulled it out last year because we were in contract with a home in the States. Unfortunately the deal fell through and we searched for the next one; however, we never did find anything worth pursuing. We visited Germany at Christmas and discussed this recent plan with my in-laws and decided we would use the IRA cash for this.
My question is – can we prove the funds were used for an international purchase if they are going to a family member in another country? If we cannot, we will be penalized almost half of the total sum (!) and in this case, can save 1700+ by recontributing it to a new IRA. (Let that be a lesson!!)
We had worked briefly with a tax professional but are also in the market for a real estate minded accountant to help us navigate through this process and hopefully future deals.
We've scoured internet forums and BP (so pardon if I've missed a similar situation) and we would be so thankful for any expertise this great community can offer!
Cheers,
Jennifer
