Using Retirement Money to Buy Real Estate
by Daniel Lamauet
www.investsafe.com
You may be unaware that special provisions under the
tax laws allow you to withdraw funds from your retirement
accounts to buy real estate.
1. First-time homebuyers can tap their IRA without tax
penalty.
You can withdraw up to $10,000 once in a lifetime from your
IRA without tax penalty to purchase a principal residence
for yourself or for a family member. A family member is
defined as
your spouse
your child
your grandchild or ancestor
your spouse's child
your spouse's grandchild or ancestor.
The homebuyer must be someone who has not owned a home in
the previous two years. If the homebuyer is married, the
spouse must not have owned a principal residence during
that period, either.
2. You can get a loan tax-free from your retirement funds
to buy real estate, even if it's not a first-time home.
If you are you self-employed, or a small business owner you
get even more flexibility to tap into your retirement
money. Your business does not have to be elaborate.. for
example, you can operate a part-time business as a sole
proprietor, a 1099 income consultant, or as an independent
contractor.
As long as you are the only employee in your business you
can establish a Self-Employed 401(k) plan. You can then
transfer funds from your IRA, qualified pension plan, like
a 401(k) or a 403(b) tax-sheltered plan, into your Self-
Employed 401(k) plan. Assuming your plan has a loan
feature, you may borrow up to $50,000 from your account
balance (or 50 percent, whichever is less). The loan will
stay tax-free and penalty-free, as long as the money is
paid back on time. You can use the loan for any purpose,
but if you use the money to buy a primary residence, the
loan can be extended from the regular 5 years payback
period to 10 years.
By Daniel lamaute of www.InvestSafe.com. InvestSafe.com is
operated by Lamaute Capital, Inc., an investment that
specializes in retirement plans for individuals and
organizations. Copyrighted February 2003.
This article courtesy of http://www.ajrealestate.com.
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your newsletter provided this courtesy notice and the author
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