Posted by admin On May 20th
Last week the Wall Street Journal published an article saying “Tax Court Slaps down IRAs Holding Alternative Assets”. While technically that was true, it was a very unique circumstance and did not apply to most of the hundreds of thousands of IRA owners that hold alternative assets. The case revolved around two IRAs that held an “operating company” private stock in their IRA. These assets are not only unique but very technical to set up. These assets have always been questionable and looked at by the IRS. In the last few years they have drawn the ire of the IRS. There is typically a problem because either they were set up incorrectly or they violated the prohibited transaction rules. They are also incredibly expensive to set up. Read the rest of this entry »
Posted by admin On May 7th
Whether you are a stay-at-home Mom/Dad or just taking some time off from work, doesn’t mean you should take a break from saving for retirement. Did you know that a non-working spouse can make a tax deductible IRA contribution of up to $6,500 ($5,500 if under age 50) for 2013? There are only a few eligibility requirements for a non-working spouse to comply with. Read the rest of this entry »
Posted by admin On May 6th
One of the most complicated areas of self-directed IRAs is Unrelated Business Income Tax (UBIT). It is commonly called UBIT. In certain situations, an IRA can owe taxes. UBIT will apply to specific types of accounts: Traditional IRAs, Roth, Simple, SEP and Educational Savings Plans (ESA). UBIT will not apply to 401(k) plans. It is important to discuss with your tax advisor the consequence of UBIT and how it will affect you. Basically, tax is owed on the non-IRA portion of an investment; usually it applies to the financed portion of investment. Read the rest of this entry »
Posted by admin On April 29th
Now that the sales of Real Estate have ticked up, the question becomes can I 1031 Exchange new properties held less than one year? The big question the IRS asks is intent. What was your intent with the property and do you intend to make this a long term hold? Unfortunately for us, the IRS does not tell us exactly how long to hold a property to qualify for 1031 exchange treatment. The one thing the IRS does tell us is that they do not like property to be exchange if it was held for resale. So basically they are saying if you buy a piece of property and you put a sign up in the front yard, this will not qualify and then you buy another property and flip that one. Read the rest of this entry »
Posted by admin On April 10th
Recently I was assisting a new client with his new self-directed IRA. Our client wanted to purchase a piece of real estate with his new Advanta self-directed IRA. He was funding his new account by transferring 3 different IRAs into his Advanta IRA. As I continued to discuss our clients account and upcoming transaction he disclosed to me that one of the IRA’s he was planning on transferring was a Roth. He did not know that he could not transfer a Traditional IRA into a Roth IRA without doing a conversion and paying the taxes. Our client needed the funds from all 3 IRAs to make the purchase; he wanted to know what his options were. I let him know that he had 3 different options, he could open a second Roth IRA account with Advanta and purchase the property with both IRAs, he could partner up with his IRA to purchase the property with personal and IRA funds, or he could do a Roth conversion and convert the Traditional IRAs to Roth IRAs and pay the taxes. Our client didn’t want to open up two separate accounts and he didn’t want to use any personal funds to make the real estate purchase. Therefore he was only left with the Roth conversion. Read the rest of this entry »
Posted by admin On April 9th
There have been several occasions over the years where a client of AdvantaIRA Trust, LLC will ask us questions about our administration fees. In some cases, people will question why we charge an administration fee at all. I mean, after all, Charles Schwab and most of the other securities brokerages do free IRA Administration. Similarly, local banks will administer your IRA for free as well. However, there is one big difference between AdvantaIRA and these other organizations. AdvantaIRA does not sell any investments. Read the rest of this entry »
Posted by admin On April 2nd
Many farmers do not realize the enormous benefit that a 1031 Exchnage can afford them. 1031 is the tax code section that allows owners of investment or business assets to exchange (and buy up in value) which will result in a deferral of all taxes. Farmers and Ranchers can exchange land as long as the replacement property is held for investment. Read the rest of this entry »
Posted by admin On March 28th
With the recent increase in land prices for farmers and ranchers, a 1031 exchange can be a tremendous tax savings opportunity. The current increase in the capital gains rates to 20% plus the healthcare tax of 3.8% will warrant prudent tax planning by today’s family farm.
A 1031 exchange allows for real property held for use in investment, trade or business to be exchanged for other like kind property and can result in a complete deferral of all taxes due, including state and local taxes. This means that the disposition of farmland and subsequent purchase of new investment real estate can be virtually tax free. 1031 exchanges are sometimes called Starker Exchanges based on the court case that helped define the regulations. Read the rest of this entry »
Posted by admin On March 25th
DO purchase real estate for investment purposes. Adding real estate to your retirement plan is a great way to diversify your portfolio, however you must keep in mind that it must be for investment purposes only. This means you are not able to live in it personally or use it as a vacation home. The IRS wants you to benefit from it at retirement, not now.
DON’T buy or sell from a disqualified third party. Disqualified parties include: you and your spouse, any business of which you have a majority interest in, your parents, your children and their spouses, your grandchildren or any fiduciary to the IRA. Your siblings are not disqualified so you are more than welcome to sell or buy a property from your brother or sister as long as the property is bought or sold at Fair Market Value. Read the rest of this entry »
Posted by admin On January 4th
Effective January 1, 2013 capital gains tax rates are increasing to 20% for individuals making over $400,000 and there will be a new tax on investment income including the sale of real estate. Let our strategies, including 1031 exchanges, show you how to defer or eliminate these taxes. Read the rest of this entry »
Last week the Wall Street Journal published an article saying “Tax Court Slaps down IRAs Holding Alternative Assets”. While technically that was true, it was a very unique circumstance and did not apply to most of the hundreds of thousands of IRA owners that hold alternative assets. The case revolved around two IRAs that held an “operating company” private stock in their IRA. These assets are not only unique but very technical to set up. These assets have always been questionable and looked at by the IRS. In the last few years they have drawn the ire of the IRS. There is typically a problem because either they were set up incorrectly or they violated the prohibited transaction rules. They are also incredibly expensive to set up. Read the rest of this entry »
