Self-directed Real Estate IRA Purchases
I’m curious what others do when making offers to purchase on real estate. I use Equity Trust and it’s always a minor hassle. I use one of several methods.
(1)make the initial offer with the buyer as “and/or assigns” This can be a pain because Equity Trust won’t sign “And/or assigns” contracts, so you have to do a new one with them
(2) Inform the listing agent I will be making an offer within 24 hours and pay the $50 rush fee to have Equity Trust sign and fax the offer. This is an unnecessary fee if they don’t accept the offer.
(3) Tell the listing agent the offer will be faxed to them in 3 days (no charge from Equity Trust) This is much too slow if you think the seller is getting multiple offers.
Anyone have any tips for making the process quicker?
change from Equity Trust to Sterling Trust and set up LLC and eliminate a lot of fees and hassle.
1) Are you entitled to the exemption for the life of the property?
You are entitled to the capital gains exclusion as long as the current law stays in effect. If Congress changes the law to repeal the capital gains exclusion, then you not longer have the exclsuion after the new law goes into effect.
2) If you turn the property into a rental are you still entitled to the exemption?
Yes, but only as long as you can still meet the two of prior five year ownership and occupancy tests. Vacate the property and turn it into a rental for up to three years prior to sale and you still retain eligibility for the capital gains exclusion. Keep the property as a rental for three years and one day, your property is converted to an investment rental, no longer eligible for the primary residence capital gains exclusion.
3) Does the depreciation deduction affect the amount of the capital gain exemption?
No. Upon sale, unrecaptured depreciation will be taxed at 25%. All profit that is not due to depreciation can still be excluded up to the $250K/$500K limits.
4) Does the depreciation deduction become a taxable gain once the property is sold?
Yes, see #3.
Thank you Newkid; I also was wondering about depreciation recapture on a primary residence used as a rental for under three years.
Chris
It is also my understanding that you can still receive a reduced exemption if you lived in the house for less than two years. There are conditions
Being "over the hill" is much better than being under it!
[addsig]
Quote:
On 2007-01-17 08:19, mtnwizard wrote:
It is also my understanding that you can still receive a reduced exemption if you lived in the house for less than two years. There are conditions
This is true. Some conditions include:
1) Move due to a job change (distance must be at least 50 or 75 miles from where you are now).
2) Divorce
3) Birth of a child and the house is too small
There are others as well.
I appreciate the input. Question answered. Thanks