Real Estate held in IRA Question

I have several fairly large vacant land properties in my IRA and am in my late 70,s and this is in the Fl area where this has been hit really bad. My cash has been
depleted and RE taxes are due.What options are available besides fire saleing? Can I sell an interest in one of these or make a loan or whats best option?



Taxes for any real estate owned by your IRA must be paid from the IRA. If you paid the taxes with outside funds it would be a prohibited transaction. You also have RMDs to satisfy, but if there is no liquidity in the IRA, you would have to distribute some real estate OUT of the IRA. That would satisfy the RMD, and of course once a parcel was distributed from the IRA, you could pay the taxes on it from other funds.

The other solution would obviously be to NOT pay the taxes until your IRA could sell enough of the RE to add liquidity to the IRA for paying the taxes on the rest of the RE and/or RMDs. You cannot encumber IRA owned property or use the property as collarateral for a loan, as that is a prohibited transaction with respect to your IRA.

When subject to RMDs, the IRA custodian is responsible for determining the 12/31 fair market value of the IRA holdings. That might require a formal appraisal every so often, but if the value of the land has dropped, so should your RMDs since they are based on the prior year end fair market value. You might also have reason to request a re assessment of the property as that would lower your RE tax bill.



Thanks alan,Thats what I thought



RE;Real Estate held in IRA, Can I as the owner of the IRA held in trust buy back a certain percentage of the property held in order to fund it till sold .If so what is the process?



No, that would be “self dealing”, and you cannot buy or sell with your IRA on either end. You would have to distribute the property out of the IRA to yourself and then sell it, or have your IRA sell to a disinterested third party, ie not a relative who would be a disqualified party with respect to your IRA. Late fees on the taxes until this can be done should not be too costly.

But check with your IRA custodian. Self directed IRA custodians deal with these issues every day, and they may be aware of a better alternative.



I have recently been told that i could borrow on my Real Estate held in my IRA,but it had to specifically be a non-recourse loan.this is being done regularly, Does anyone know if this would be a problem?



Using IRA assets in any form to secure a loan is prohibited, even without recourse. While it would not encumber the IRA, it would be self dealing. If you had stocks in the IRA it would be equivalent to a margin loan. But even if you received the loan proceeds, the taxes must still be paid out of the IRA. If you pay the taxes from outside funds it would constitute an excess contribution to your IRA, although the IRS does not receive a contribution notice unless the IRA custodian is aware of the payment and issues a 5498.

What does the IRA custodian have to say about this?



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