Posted by Carol on October 29, 2000 at 19:50:49:
for the references. I will bone up, but my understanding was that since the ROTH IRA was simply signing on a non recourse, interest bearing balloon note that the whole transaction was clear of any taxable event. I’ll bring this up to Mid OH once I get a better understanding, as well as to my CPA, but since the Roth is doing the deal, how can it have a taxable event? A CPA I am not, so I really appreciate your diligence in giving a heads up.
Carol
Stupid? “Subject to” in Roth IRA - Posted by Joey
Posted by Joey on October 26, 2000 at 08:29:33:
I have a small Roth that I am thinking switching to Entrust or Mid Ohio. I have done several subject to type transcations but I would like to do one in my Roth. Is this permissible?
Joey
Re: Stupid? “Subject to” in Roth IRA - Posted by Joey
Posted by Joey on October 26, 2000 at 13:17:34:
The reason ask is I have 2K in Merrill Lynch and most of the purchase type deals you need a little more cash and need to qualify for a mortgage.
Joey
Re: Stupid? “Subject to” in Roth IRA - Posted by David Alexander
Posted by David Alexander on October 26, 2000 at 16:25:49:
To do deals in your IRA they would have to be subject to because you cant make your IRA responsible for a loan.
And you dont need more than 2k to start, I do deals all the time with less of my money, sometimes none and sometimes more.
David Alexander
wait a minute… - Posted by Carol
Posted by Carol on October 27, 2000 at 13:11:00:
my IRA was lent hard money to purchase and rehab a property for resale. Mid Oh handled the whole thing. The loan is secured by the property. You don’t HAVE to do 'subj to’in yr IRA if you have a willing lender.
Carol
Re: Stupid? - Posted by Joey
Posted by Joey on October 26, 2000 at 21:39:21:
Thanks for the comment. What I ment was can we still do it by using the CYA/Land Trust Method? That Bronchick/Legrand Talks about
Re: wait a minute… - Posted by David Alexander
Posted by David Alexander on October 27, 2000 at 13:31:57:
Different deal Carol, in the scenario you mention you IRA is not at risk, it is funding the whole deal. What I’m talking about is the IRA signing a note and being liable for a debt. In the instance your talking about the IRA is in control with it’s own funds.
Different animal.
David Alexander
Yes - Posted by Bud Branstetter
Posted by Bud Branstetter on October 27, 2000 at 07:29:52:
Mid-Ohio will let you buy the beneficial interest in a land trust with you as trustee. You can not be the beneficiary as that would be self dealing.
nope - Posted by Carol
Posted by Carol on October 27, 2000 at 14:00:02:
The custodian of the ira, Mid OH, signed the note for the loan, took title to the property, is making the interest payments, etc.
Mid OH set up a local Escrow Acccount, in Mid OH’s name, with me as trustee (and signatory on account) to handle disbursements from the funds which Mid OH deposited from the hard money loan.
Frankly, my IRA didn’t have the funds, prior to the loan, to do the deal.
Have I missed something or are we not talking about the same thing? The ONLY DIFF is that my note is a NON RECOURSE LOAN … so the IRA is not liable, the sole security is the property.
My poor little IRA didn’t have the proverbial pot to pee in, prior to the loan. It will net about $20k on this deal.
See ya!
C
Re: Yes - Posted by Joey
Posted by Joey on October 27, 2000 at 09:34:56:
Bud,
Could you explain the structure? As the way I see it I can not be the trustee if the ROTH Purchased it? It would have to be a friend right? Tell me if this right.
I find a property subject to. I get seller to place in land trust with my lawyer/friend being trustee. and my Roth being The benificial Interest, with an LLC being the other Benificial interest? Is this right?
Thanks
Joey
David?!? Wrong?!?! - Posted by Terry (Houston)
Posted by Terry (Houston) on October 27, 2000 at 17:11:23:
Not MY Buddy???
Heh heh heh. that’s OK I didn’t know Mid Ohio could do a transaction like this. I knew they could do the Subject to deals.
Thanks Carol and David for the clarification.
David,
See you in November for Bronchick at AREIO?
Ok, Ok, Ok… - Posted by David Alexander
Posted by David Alexander on October 27, 2000 at 16:18:27:
So I didnt Clarify myself… 
I simple meant the IRA couldnt be on the hook for a loan with recourse, which woiuld give it liability.
David Alexander
No,it is not - Posted by Bud Branstetter
Posted by Bud Branstetter on October 27, 2000 at 11:09:08:
If you buy subject to and have the beneficial interest in the name of the original owner you can buy the interest into the IRA and be trustee of the land trust. If you assign the interest of the trust to you then it would be a prohibited transaction. If you want someone else to be trustee, that is fine. There is not a need for a LLC to own an interest and would be prohibited if you had a controlling interest in the LLC.
first of all… - Posted by Carol
Posted by Carol on October 27, 2000 at 22:48:27:
never let it be said that it is about being right or wrong!! 'Specially not as concerns David!
More a matter of “clarity”!
Carol
Mistaken… - Posted by David Alexander
Posted by David Alexander on October 27, 2000 at 17:56:52:
Never Wrong… hehe.
What’s that saying
I’m never wrong.
If I’m wrong refer to number 1.
See ya at the meeting.
David Alexander
Amen - Posted by Carol
Posted by Carol on October 27, 2000 at 17:25:01:
I couldn’t agree with you more! :}
I get it Now…I think - Posted by Joey
Posted by Joey on October 27, 2000 at 11:58:43:
Thanks for your comments. It just shows you if you ask it shall be given.
Unrelated Business Income - Posted by Bud Branstetter
Posted by Bud Branstetter on October 27, 2000 at 22:38:46:
Carol,
How are you handling the issue of unrelated business income since it appears all of the money was borrowed and suppossedly the same percentage is subject to tax as unrelated business income?
It’s a Roth - Posted by Carol
Posted by Carol on October 27, 2000 at 22:46:08:
so the point of taxes is moot.
Not so fast - Posted by Bud Branstetter
Posted by Bud Branstetter on October 28, 2000 at 12:48:01:
Carol,
When using owner financing, and I would extrapolate to hard money loan, the ratio of the owner financing to your money was the same ratio on which you were charged tax personally as Unrelated Business Income. The Roth is not charged the tax, just you on your personal return.