Request For IRA Knowledge
A caller from California asked me whether Florida law would protect from creditors a Florida property owned by a Florida LLC which in turn was owned by the caller's self-directed IRA. I responded that Florida law exempting IRAs from creditors would not apply to this California resident, although because the real estate would be situated in Florida the creditor remedy may be limited by Florida law which makes charging liens the sole remedy to pursue a member's LLC interest. I have not researched this issue, and it could be that a California court may give a creditor greater rights to levy on the LLC interest.
What was more interesting was the caller's understanding that an LLC owning investment real estate could be held in an IRA. I am not an expert in income tax law, but other people and some tax professionals have stated that IRAs could not own investment real estate. The possibility of purchasing investment property through an IRA would give Florida residents another planning tool for protected real estate investment.
If you, the reader, is knowledgeable about income tax regulations pertaining to IRAs I would appreciate an email to let me know if some IRAs can be used to own investment real estate. Thanks in advance for your feedback
At least two companies are briefing Tampa Bay and Sarasota area real estate investors regarding use of IRAs to purchase real estate. Check these web sites: www.trustetc.com and www.guidantfinancial.com.
An IRA holding US and/or foreign real estate is an old subject with international property investors. In most cases the IRA is held off-shore for the purposes of holding the real estate assets. A US based Trust company opens the off-shore IRA account on your behalf to hold the assets.
Another company that specializes in self-directed IRAs is Pensco. www.Pensco.com
The problem with owning real estate inside an IRA are the IRC regulations and the subsequent penalties. To wit, if the Service finds a taxpayer in violation the entire IRA balance can be considered distributed with subsequent tax liability with possible penalties.