Using IRA for downpayment

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  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    2y

    @Brad Kanouse,

    If you take a distribution from an IRA - it will be subject to taxes and penalties.

    You can convert your IRA into a "Self-directed IRA" and have the IRA buy the property, in this case you are not the owner, the IRA is. You won't be able to use conventional financing and must use a non-recourse loan which typically require 40% down. Also be aware of Unrelated Business Income Tax (or UBIT) on leveraged real estate inside of an IRA.

    Or better yet, since you are self-employed - go with a truly self-directed Solo 401k plan, which would be a much better option and will help you avoid the UBIT on this investment. 

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