Self-Directed IRA With Owner Financing
For the past few years I’ve used my self-directed IRA to buy, flip and hold individual lots and never considered financing due to the non-recourse lender hurdles.
I’m interested in some raw land and the owner is willing to owner finance for 20% down. My question is this, if I have my IRA buy it do I need to do anything other than make certain I have enough in the IRA account to pay each month’s payment?
LT Cap gains rate is currently 15% for capital assets held > 1year (lower if your income is very low). Provide more info. and we can provide some additional info.
Was the property purchased with the intent to hold or with the intent to flip? If they built a house, then sold it, the profit would be SE income and subject to SS/Medicare taxes as well as their regular tax bracket, potentially totalling over 50%. If they rented the property out this would indicate an intent to hold for the long term, and they would pay a maximum of 15% long term capital gains.
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Chris