gee...anyone have any experience in this area... specically, roll-over into a real-estate account.....have some limited funds availble, but have been taking a hit on captial gains.....wondering if anyone would have some tips on reaping tax benefits and decreasing tax,
my husband lost his option (and job of 24 years) and since has been working not only in his his new "job" with no pension , etc, but re-habing a house or two or whatever he can....wondering if anyone out there has any experience with self-directed IRA's, self directed ROTH's and the law invloived...just a thoght...
rollover of a 401-K into self directed IRA
Moderator: Aitrus
Thats a lot to think about..
But several things.... first - if you dont already own a home, buy one. You will see major tax breaks for the interest you pay... but you have to live there for a portion of the year. For the ROTHs/ IRAs, there are limits and tax bennies also, but it varries on your circumstances and income, so seek good advice on that. I also have a ROTH IRA (not a traditional IRA) with few tax bennies now, but other benefits later. Capital gains should not affect your TSP /401k unless you are withdrawing money.. it sits there tax free until it is used. Thats a good thing.. and a good way to defer taxes (until you are taxed later at a lower rate). if you are not FULLY funding your TSP, i would recomend you do so before you do anything else (except maybe pay off any credit card debt). Remember to include the increased "catch up" limits, if applicable.
I also have some $$$ scattered in International realestate funds... but those funds are, in large, just getting started in the US so they dont have a long track record and of course, currency exchange always comes into play & can cause large losses despite a rise in foreign propery values - it can eat those gains up. An IRA is funded by after tax money... so you already paid the piper... and may again when you take the gains on it later. ouch. And in general, you are limited to a relativly small amount.. I think its like 6K/yr now.. but again.. its another place (other than your matress or gold/silver) to stash your cash..
If capital gains are getting you... then look for shelters to defer those gains, preferably with PRE tax dollars now. Having said that, also look for other shelters / write offs... perhaps you could "gift" your $$ (10K /yr/person limit?) to your kids? Depending on your situation, a living trust for them may also be a way to dodge some gains... Would you adopt me?
just thoughts... which are cheap.. but get some good advise from a tax pro - taxes seem to be your problem child, not how or where to invest.
I also have some $$$ scattered in International realestate funds... but those funds are, in large, just getting started in the US so they dont have a long track record and of course, currency exchange always comes into play & can cause large losses despite a rise in foreign propery values - it can eat those gains up. An IRA is funded by after tax money... so you already paid the piper... and may again when you take the gains on it later. ouch. And in general, you are limited to a relativly small amount.. I think its like 6K/yr now.. but again.. its another place (other than your matress or gold/silver) to stash your cash..
If capital gains are getting you... then look for shelters to defer those gains, preferably with PRE tax dollars now. Having said that, also look for other shelters / write offs... perhaps you could "gift" your $$ (10K /yr/person limit?) to your kids? Depending on your situation, a living trust for them may also be a way to dodge some gains... Would you adopt me?
just thoughts... which are cheap.. but get some good advise from a tax pro - taxes seem to be your problem child, not how or where to invest.
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crondanet5
- Posts: 4330
- Joined: Tue Aug 19, 2008 8:51 pm
I did a traditional to Roth conversion in 2008
The Roth concept is wonderful because you can pass it on to your heirs tax free and they can make it continue to grow after that. That multi-generational aspect is phenomenal. But it was small. The tax consequence wasn't that great.
Couple things here. First, I gather your husband and you are still doing okay despite his change of profession. Congratulations. Second, I assume you may already own your own home and perhaps a rehab or two. If not, and income is a concern, I would recommend you rent rather than buy. If his current job also folds and another job opens up somewhere else, then you can just move. Mobility is the key. Third, I suggest you talk with a Tax CPA, an IRS representative, and a ceritified financial plannner about the best tax avoidance possibilities/investment avenue available to you. We don't know your particulars nor is this the format to reveal any of them to us. Seek professional assistance on this. Finally, I would ask why you want to go into real estate in a self-directed brokerage account. My Roth is a self-directed brokerage, but I buy and sell stocks to increase its value. Seems to me there is some concern in the industry about the REITS and real estate investment despite the increase in REITS values recently. Again, ask the professionals because ultimately it is the IRS you must satisfy for tax liability, and penalties hurt. Okay?
Couple things here. First, I gather your husband and you are still doing okay despite his change of profession. Congratulations. Second, I assume you may already own your own home and perhaps a rehab or two. If not, and income is a concern, I would recommend you rent rather than buy. If his current job also folds and another job opens up somewhere else, then you can just move. Mobility is the key. Third, I suggest you talk with a Tax CPA, an IRS representative, and a ceritified financial plannner about the best tax avoidance possibilities/investment avenue available to you. We don't know your particulars nor is this the format to reveal any of them to us. Seek professional assistance on this. Finally, I would ask why you want to go into real estate in a self-directed brokerage account. My Roth is a self-directed brokerage, but I buy and sell stocks to increase its value. Seems to me there is some concern in the industry about the REITS and real estate investment despite the increase in REITS values recently. Again, ask the professionals because ultimately it is the IRS you must satisfy for tax liability, and penalties hurt. Okay?
well, maybe a 401k rollover into something else....
first off, i'm not real trusting of my husbands former custodian....Valic (AIG's new name) plus not real flexible ...through the years we have re-habbed homes to make some $$$, but feel a bit robbed by captal gains....kids in college, two rental units, wondering if there is a better way...unfortunately, it does appear that using limited roll-over funds would still require us to pay investment or capital gains taxes on any $$$ amounts we loan and profits are taxed accordindly...but might be useful information for investors much younger than I, and not a bad avenue to pursue when we are actaully able to pursue a roth option....particularly for the young....i think it is worth some thought and investigation....into everything.....having spent less than a year on this site has opened my eyes and my mind....damn...if only i'd have found these options and thoughts years ago...but still...13 years to go for some of the family members, and lots of great advice....an amazing resource to share with newbies...all i can say it is has been a gift to my family and myself. many thanks to all
follow-up
Real estate
IRS § 1031 - 1031 Exchanges allows investors to defer paying capital gains and depreciation recapture taxes by allowing them to reinvest 100% of the proceeds from their sale of investment properties into a like-kind or greater value property.
soruce: http://www.clearleadinc.com/site/avoidi ... s-tax.html
Taxpayers Relief Act of 1997, capital gains generated from the sale of a primary residence are tax-free. Individuals pay no taxes on profits up to $250,000. And, couples are allowed to combine their tax credit and exclude up to twice the amount from a home sale.
http://www.freemoneyfinance.com/2006/10 ... tal_g.html
gifting... I believe the limit has been raised to 11K now.. but both you and your spouse could gift.. rasing the limit to 22K
giving appreciated stock to your kids, they'll pay at the lowest rate (5 percent.)
source: http://www.msnbc.msn.com/id/7070269/ns/ ... l_finance/
and of course, the CYA part... go see a professional tax advisor who specializes in this. Its relativly cheap insurance against ptentially disaterous results. Its never too late.. but better if sooner
IRS § 1031 - 1031 Exchanges allows investors to defer paying capital gains and depreciation recapture taxes by allowing them to reinvest 100% of the proceeds from their sale of investment properties into a like-kind or greater value property.
soruce: http://www.clearleadinc.com/site/avoidi ... s-tax.html
Taxpayers Relief Act of 1997, capital gains generated from the sale of a primary residence are tax-free. Individuals pay no taxes on profits up to $250,000. And, couples are allowed to combine their tax credit and exclude up to twice the amount from a home sale.
http://www.freemoneyfinance.com/2006/10 ... tal_g.html
gifting... I believe the limit has been raised to 11K now.. but both you and your spouse could gift.. rasing the limit to 22K
giving appreciated stock to your kids, they'll pay at the lowest rate (5 percent.)
source: http://www.msnbc.msn.com/id/7070269/ns/ ... l_finance/
and of course, the CYA part... go see a professional tax advisor who specializes in this. Its relativly cheap insurance against ptentially disaterous results. Its never too late.. but better if sooner
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crondanet5
- Posts: 4330
- Joined: Tue Aug 19, 2008 8:51 pm
That is, if you live in the rrehab 2 years before selling.
Otherwise you pay the capital gains. But getting back to your 401k situation, when I retire I am planning to roll my TSP account into a self-directed brokerage account. If I choose to use Ebb's ETF-TSP equivalents to invest in, or find a few good stocks, I can do it with no IFT restrictions. By the same token, you should definitely "roll" your husband's old 401k out of the former employer's plan. Remember ENRON? Also I have found that many plans have very limited or restrictive choices so you simply cannot make a lot of money in there, but the owners and senior managers seem to make out just fine. I have yet to find a mutual fund that meets my criteria. So that is why I suggest the brokerage account alternative. You manage it, you make the decisions.
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