Rental Property Inside an Inherited IRA

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Rental Property Inside an Inherited IRA

Mark Sacandy
Member since 2020 · 8 posts · 3 votes

My sister and I own a rental property within an Inherited IRA. Previously, I had no knowledge of this kind of account. They pay all of the maintenance, taxes etc from the account and we just build our balances. There are funds from my late sister that were in another inherited account and from which I was required, this tax year, to accept a RMD. My question is, will I have to liquidate a portion of the property within the IRA in order to take a RMD this year? I'm probably omitting important information, but if others will ask questions, I'll try to more focus my inquiry.

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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
10mo

@Mark Sacandy,

If you don't have enough cash in the IRA to satisfy the RMD you will have two options:

1. Liquidate the property

2. Take a portion or the entire property out as "in-kind distribution."

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  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    10mo

    @Mark Sacandy,

    If you don't have enough cash in the IRA to satisfy the RMD you will have two options:

    1. Liquidate the property

    2. Take a portion or the entire property out as "in-kind distribution."

    4Reply
  • Rohullah Sharifi
    Dr · VA · Member since 2025 · 154 posts · 34 votes
    10mo

    If sufficient funds are available to satisfy the required minimum distribution, you may proceed accordingly. As this obligation relates to an inherited IRA, I would advise taking into consideration whether the property is held in trust, as this may affect how the distribution is administered.

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    10mo

    If you inherited this in 2020 or later I BELIEVE it all has to be liquidated within 10 years. It will be hard to keep the property more than a couple years unless the account has almost as much cash as the property is worth. 

    You might want to find a low income year and withdraw the property. You could also ask the company managing the account for you if they have a recommended tax/accounting expert if you don’t already have one. 

    1Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    9mo

    Yes, depending on when you inherited the IRA will determine when you need to distribute / liquidate the IRA.

    The In-kind distribution works but it really depends on the value of the property to determine if it is worth it.
    The cost to get annual appraisals along with an attorney / title company to do the distribution can be costly.

    Best of luck!

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