All Forum Posts by: Willie Holdman
Willie Holdman has started 3 posts and replied 14 times.
Post: Self Directed Roth IRA for real estate investment
- Investor
- utah
- Posts 14
- Votes 2
frustrating you have to save enough income in a self directed 401k to really invest in real estate. Basically you need at least 350,000 in the account to make a transaction these days. Then there are limits you can put into it every year. So realistically it takes you about 7 years to grow it enough to purchase anything it seems.
Post: Self Directed Roth IRA for real estate investment
- Investor
- utah
- Posts 14
- Votes 2
Quote from @Marco Bario:
Beyond purchase, the issues I see have to do with...
...management. You or your LLC can't do any work at the property - including property management. You will need to use 3rd party management and others to perform work at the home.
... further expenses and improvements. When you split up the purchase that way, all subsequent money must be contributed in the same ratio. If the IRA owns 40%, it must pay 40% every time there's an expense. That means it has to have the money.
...accounting. In part because of what I mentioned above, accounting has to be very detailed. Mistakes leading to funds being handled improperly could lead to the IRS blowing up the entire IRA account as a full taxable disbursement.
...liability. My retirement account owns assets such as notes that won't cause it to be sued if someone slips and falls. Direct ownership of real property is different.
Thanks for the info.
Post: Self Directed Roth IRA for real estate investment
- Investor
- utah
- Posts 14
- Votes 2
I have a lot of equity in other properties. I could easily do a HLOC or Home Equity Loan, or Cash out refinance. Basically I'm trying to use my 127,000 in my self directed to purchase this STR, and trying to find the best and cheapest way to come up with the rest that is legal.
Post: Self Directed Roth IRA for real estate investment
- Investor
- utah
- Posts 14
- Votes 2
Quote from @AJ Exner:
Quote from @Willie Holdman:
I want to purchase a turn key airbnb night next door to my other one. I have 127,000 in my self directed roth. Purchase price is 350,000. How do I go about using these funds towards the purchase price, that would leave 223,000. It seems you can't just do partial from your self directed, and then partial from my llc property business. Or can I?
You could work with a DSCR lender that is okay utilizing funds from an IRA, of which there are a few. But then you might also have to be aware of groups who are also okay with STRs and getting creative in that sense.
Is the property that you are looking at in Utah?
yes
Post: Self Directed Roth IRA for real estate investment
- Investor
- utah
- Posts 14
- Votes 2
Quote from @Dmitriy Fomichenko:
You need a non-recourse loan (conventional is prohibited with IRAs). Here is a list of lenders who can help:
https://www.biggerpockets.com/blogs/2810/50272-list-of-non-r...
My self directed solo 401k is actually with solera.
Post: Self Directed Roth IRA for real estate investment
- Investor
- utah
- Posts 14
- Votes 2
I want to purchase a turn key airbnb night next door to my other one. I have 127,000 in my self directed roth. Purchase price is 350,000. How do I go about using these funds towards the purchase price, that would leave 223,000. It seems you can't just do partial from your self directed, and then partial from my llc property business. Or can I?
Post: What are the rules in paying no capitol gains tax for income below 41,675?
- Investor
- utah
- Posts 14
- Votes 2
Quote from @Basit Siddiqi:
If your income is in the bottom two brackets after factoring in the standard deduction / itemized deduction, and your income is composed of capital gains, you won't have any capital gains tax.
I say bottom two brackets because the figure that you mentioned gets indexed for inflation every year.
Furthermore, the number is different based on your filing status.
I see...the debt paid off on the home at the sale was 360,000, even though I showed actual income below 20,000 through my business, but I guess the 360,000 counts as "Income" in this case and I need to pay capital gains tax on it.
Post: What are the rules in paying no capitol gains tax for income below 41,675?
- Investor
- utah
- Posts 14
- Votes 2
Quote from @David Orr:
Yes, it includes the capital gains. So if your income plus the capital gains is getting into the higher (15%) range, then you'll be taxed on that portion of the gains at that higher cap gains percent.
David Orr
Tax Modern - Tax prep/advising for rental real estate owners
Gotcha....I guess I just gotta pay uncle sam! Thats a big hit I wasnt counting on.
Post: What are the rules in paying no capitol gains tax for income below 41,675?
- Investor
- utah
- Posts 14
- Votes 2
Quote from @Henry Clark:
Need the numbers.
What was the net sales price after expenses?
What was the cost basis?
How much was the loan?
Go with 50% split personal and business.
You took $250,000 exemption on 2 out of 5 years. Against the total gain or or just the personal portion?
Was your business there also at the same time for the entire period or a portion? What portion?
You really need to talk with your cpa. Since they need all of the detail above.
Yes I talked to my CPA. I believe I just didn't think about the capital gains tax on debt...But it seems unless I took out more debt on my new build/home I am responsible for the capitol gains on that amount that settled the debt:(.
Post: What are the rules in paying no capitol gains tax for income below 41,675?
- Investor
- utah
- Posts 14
- Votes 2
Its kind of confusing...but I worked from my home and used half for business. I took the 250,000 exemption, single, living in the home for over 2 years...then did a 1031 exchange on the business portion of the home towards another property, but still had a mortgage to pay off after selling the home/business. I'm just trying to see how the capital gains tax applies if it does at all for someone who makes less than 41,675 and if it includes the mortgage payoff capital gains.