Dec 6, 2005, 3:10 PM
Post #8 of 31
Bubba, conservative and laddered is the way to go.
Re: [sfmacaws] Buying in Mexico from self-directed IRA LLC
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This portion though would be rolled over into a separate IRA entity specifically to own rental real estate. We found a small but presently uninhabitable property in Ajijic for round numbers $50K. So let's say we transfer $100K into this new IRA and title it "Bank & Trust, custodian FBO Mrs. Anita, IRA" we have to make the offer for the property in the name of "Mrs. Anita, IRA" and then the remittance for the property would be made from a check that says at the top of it, "Mrs. Anita, IRA" and it would be drawn on funds held by the Bank & Trust, custodian. Therefore the Deed must read, "Mrs. Anita, IRA", the rental company contract must read the same. And the property must be appraised every year and reported, along with other forms, to the IRS. I wouldn't think those figures would be reported to Mexico.
However since it is not habitable, work needs to be done. So the work is contracted for under the name "Mrs. Anita, IRA" and all expenses are paid for from that Bank & Trust, custodian, account as well as all income generated, or sale profit, eventually returns directly to that account.
Jonna, I am assuming if I add the LLC component to the IRA that is what triggers the Mexican corporation argument - we have a foreign tax accountant looking at closely. The LLC is not absolutely necessary as it primarily shields personal assets if you should get sued in connection with the property and also works conversely shielding the asset if sued for something else. There are some limited taxation benefits on gain, but those are minor in this case. And of course should I want to invest in US real estate I would need that, so the IRA could be rolled over again into and IRA, LLC entity.
When the CFP and accountant explain it this all seems simple. Our broker is familiar with it, not happy with the exit of some of his possible commission capital, but said he'd probably do it this way.
We got to this by way of wanting to purchase urban real estate in downtown Baltimore, $35K, 3 story, stripped brownstones eligible for 2 and 4% 204 money for rehab and 15 year tax abatements. However, the regional authority can only loan money to individuals who actually live in the city now. But the IRS codes mention foreign real estate and that is how this began.
Getting the IRA attached to the offer has been so hard to explain to the relator.
Jonna, let us know when you are back in the area, its a good bet Bubba and I will be neighbors, so bring that RV right on in the street. Best to the red head.