Hi folks. Quick question for the lenders out there. My wife and I trend toward the asset-rich but income-poor side of the spectrum so I'm trying to completely understand our ability to borrow in the future to upgrade to a slightly newer/larger primary residence, as well as for future mortgages on investment properties. Currently I own several mortgage notes through my Self Directed IRA LLC. They make a monthly income through interest payments. One of the notes is currently under foreclosure so I may end up owning and renting out that property as well. Can I use that income (both the interest income and the potential rental income) to improve my reported income/DTI on a mortgage application, or does it not count because the money is theoretically "locked" away in a retirement account? If I CAN use it, would I just show invoices, etc. as proof of income since those details don't appear on our tax returns like taxable income would?
Thanks in advance!
IRS rules prohibit you from pledging your IRA to secure personal debt. The IRA is not you and income from the IRA held notes is not your income currently. The fact that your IRA owns notes instead of stocks makes no difference.
Got it thanks. That's what I thought but wanted some confirmation.
You can potentially count that income on an asset depletion basis. See the following guidelines: Oh and by the way, you are not pledging these assets as collateral, you are merely using them to derive income that is countable per the conventional guidelines.
Interesting, thanks Kevin! So in that equation it'd be more about the value of the assets in the IRA than the actual monthly income/cash-flow that I receive from them, right?