IRA vs regular investing - Posted by NB(ID)

Posted by Glenn-OH on March 11, 2000 at 20:21:01:

How about some of each. You can shelter up to $25K of your income on RE paper losses (cost recovery - depreciation), beyond that, you can use your IRA’s for the more profitable opportunities.

IRA vs regular investing - Posted by NB(ID)

Posted by NB(ID) on March 11, 2000 at 09:56:50:

If I purchase a property (as an investment, not a flip) using my IRA then whatever income I receive from that property after taxes and expenses come back into that account–right? My husband and I have a combined income that makes it so we only get back about $1500 of the $15,000 in taxes that we pay to the government (not to mention the state) so wouldn’t it be better to buy a property without using the IRA funds but instead use our regular income as a way to get more money back that we’ve paid in yearly state and government taxes?

Hope you can understand what I’m getting at cuz I’m kind of lost here.

Thanx–Angels on your body:)

Re: IRA vs regular investing - Posted by Bud Branstetter

Posted by Bud Branstetter on March 11, 2000 at 20:46:19:

First let me say that you should be adjusting you withholding so that you owe a small about instead of getting money back. Second is that you should be putting the maximum amount into salary reduction plans at your work. Those are things like 401K’s, stock plans, profit sharing, etc. Next is that with real estate the income generated outside an IRA is subject to taxes but not the FICA. Appreciation is deferred and depreciation can help. I am not a fan of losing money before or after taxes just for a write off.

What I am a fan of is investing with an IRA. You may not not be eligible for a Roth and that is too bad. With the regular IRA the profit is tax deferred. It is like getting a zero interest loan for as long as you like. The next 10K you make will be taxed at let’s say 32%. Instead, had you made the profit from realestate, you could have gotten a $3200 loan to invest as you see fit for as long as you want.

While that 4K you can contribute to your IRA may seem pidly now, consider if you did one L/O deal a year and made 10 or 15K from it. NO withholding-NO taxes. And you really don’t need any of your money from the IRA if done right where you get more option consideration than you put up. Same thing on flips using the IRA.