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Q: Real Estate Partnership ( Answered,   0 Comments )
Subject: Real Estate Partnership
Category: Business and Money > Accounting
Asked by: rizzmar-ga
List Price: $20.00
Posted: 14 Mar 2005 14:07 PST
Expires: 13 Apr 2005 15:07 PDT
Question ID: 494617
Can a real estate partnership be established between a husband and a
wife and be funded with qualified retirement money (IRA rollovers)? 
The purpose of the partnership would be to by a piece of commercial
office property.
Subject: Re: Real Estate Partnership
Answered By: taxmama-ga on 21 Mar 2005 07:49 PST
Dear Rizzmar,

The reason I am answering your question really is to prevent
someone else from giving you bad advice. 

This is an area I have been researching for many months. 

Here's the upshot of this situation - yes, it IS possible to do. 

However, it is complicated and costly. And it's hard to find a 
adminstrator. But if you do, they will charge you a fortune. 
They will charge you to certify the investment. Then they will 
charge you a solid annual fee. 

But, all that's OK. 

Here's the kicker. Putting real estate into your IRA generally
requires a mortgage loan. That causes something like unrelated
business income in an IRA. That means you'll have to do some
convoluted calculations to see what is and isn't taxable. 

Anyway, I am still researching the details of all the pros and cons. 
I have lots and lots of arguments from tax professionals about all
the problems associated with establishing such accounts. 

So, please, search out a tax professional who is familiar with the
concept and knows some good administrators with reasonable fees.

Please understand, the reason I wanted to research this is because, 
like you, I thought this would be a much better use of IRA and 401(k)
rollover money than the low-return investment accounts. 

As optimistic and aggressive as I am, I am getting convinced this
is more trouble than you can imagine.

Good luck. 

Your TaxMama-ga
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