Like many others I fell in love with Belize after visiting. We searched for property and I found a home I wanted. Our daughters are still in school and so it will be at least 5 years before we move there. If I purchase this home with a self directed IRA and decide I want to live there later, how can I go about it without losing my IRA or being taxed? Thanks!
Do not use an IRA to purchase a property you want personally in the future.
You may not buy the property from the IRA. The only way to get the property out would be to have the property appraised and then transfer it out of the IRA to yourself as a taxable distribution. That usually does not make sense.
IRA (and investments you make with your IRA) designed to provide you with the future benefits, at retirement. While you are allowed to buy investment property pretty much anywhere in the world - it has to be investment only, you personally would not be able to use it.
The only way as Brian mentioned is to distribute the property out (also known as "in-kind distribution").
Your intent should not be to use the property personally for retirement however some clients find that it is easier to take an “in-kind” distribution than purchase a new property. @Brian Eastman and @Dmitriy Fomichenko summed it up nicely but if it is a Roth there is no income tax but a transfer tax for changing ownership.
While in use by the IRA, the IRA rules prohibited the use of the property for personal use.
Not until the property is distributed in-kind (distribution) in your name whereby the IRA no longer owns the property and you pay taxes on the value of property at time of distribution will you be able use it for personal use. You will want to check with your financial adviser as it may not make sense to hold the property in the IRA if you intend to later take it as an in-kind distribution because of taxes.
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