All Forum Posts by: Willie Holdman

@Willie Holdman

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.

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?

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...

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.

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

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.