If you have a lot of money in an IRA you might be interested in 72(t) distributions. They allow you to start taking a certain amount of money out now (and paying normal income tax on it) instead of waiting until you are 59.5. For most people this isn’t a good idea, but it is a good option to know about.
Your IRA can buy the real estate you want now. The OUTSIDE method of investing in real estate by utilization of an IRA takes advantage of the 72(t) ruling for people under 59 1/2. This proprietary process of structuring an IRA to purchase real estate without any of the usual prohibitive transactions, including occupancy, has many tax benefits besides the obvious benefit of facilitating the purchase of real estate that might otherwise be out of the financial reach of the IRA owner.
@Claire – So are you just saying that you can use your 72(t) withdrawals to make payments on a mortgage? I don’t see the benefit of that because you have to pay tax on the money as you take it out anyway. Or are you referring to another method I’m not familiar with?
Mark – What you have noted is a small part of the overall plan and only applies to those clients who are under the age of 59 1/2. Each IRA/real estate plan is customized to each client’s different scenario and therefore requires different structuring which in turn results in different intrinsic and tax benefits. If you visit our BLOG http://blog.urangafinancial.com/ and read the Case In Point section I think you will begin to appreciate the different scenarios in which the OUTSIDE™ method can be applied to the great benefit to our clients.