It is not a matter of capital gains it is a matter of it being a distribution and paying the 10% early distribution penalty plus the tax on the whole income in current year. The clock starts when they take it out not when you get it. Be sure to have funds wired, not mailed.
At the same time have him more 170K to Mid Ohio or other custodian so that it will be there in a few weeks. Then you can have him make a loan to you or against the property to get the money back to his IRA to stop the time bomb clock from ticking away.
Only one rollover is allow in any 12 month period. Sixty days goes awfully fast.
I have a property I am negotiating to buy from a bank who has it in there REO due to a foreclosure. My private investor can supply the funds to buy the property ($170,000.00) from his traditional IRA. The problem is that the distibuted funds from the IRA must be back in the IRA plan within 60 days to not trigger capital gains tax on that $170,000.00. My question is: If I did not have the initial $170,000.00 back in the IRA account by the first 60 days, could I (upon the private investors approval) use a second distribution of ($170,000.00) to rollover the first 170 to satisfy the 1st $170,000.00 IRA distibution as well as give me another 60 days before the capital gains tax (on the second $170,000.00) is due back in the account?? My investor has agreed to this (if it is allowable). That is what I am asking!!?!?!? The reason I am aking this is that I feel strongly that it will take me more than 2 months to sell the house (especially with no seasonning, owning the house for such a short time) and I don’t want to penalize my investor. There is not enough time for my investor to switch to a self directed IRA account (like Mid-OHIO SECURITIES) because the property will sell quickly!!! Several offers have already been made!!!
Any Help!?!?!?!?!
Thanks