Buying a Investment Property using an IRA

4 Replies

Have any BP members used their IRA/401K to buy an investment property as cash and successfully completed a cash-out Refi/

Thanks

Before you put real estate into a retirement account I strongly suggest you talk to a CPA and attorney. What you are suggesting may or may not be legal I am not that  knowledgeable on that type of transaction

Your IRA would be the entity that does a cash out refi, not you. It is possible for an IRA to get loans, but the LTV is going to be around 65%. It must be a true non-recourse loan and only in your IRA's name. If you have to give your social security number, it probably not just in your IRA's name. Owning a property inside an IRA that has financing will cause the IRA to incur UDFI (unrelated debt financed income) and your IRA will have to pay tax on it. There are LOTS of rules about owning a property inside an IRA.

@Jon Holdman @John Thedford Thanks!!!

I had a conversation with a manager at Charles Schwab and I was under the impression I could pull the money out and return it within 60 days with out penalty. Not for sure which IRA we were discussing but I will certainly follow up with him and a CPA.

Originally posted by @Nathaniel Sconiers :

@Jon Holdman @John Thedford Thanks!!!

I had a conversation with a manager at Charles Schwab and I was under the impression I could pull the money out and return it within 60 days with out penalty. Not for sure which IRA we were discussing but I will certainly follow up with him and a CPA.

 Sure, but that is an extremely high-risk proposition.  If you miss the 60 days, you'll be on the hook for taxes and penalties.  There are all sorts of delays that can occur in real estate and loan transactions and many or most, you have little or no control over.  Think long and hard before you pull the trigger on this.

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