Buying Your Retirement Home With Your IRA

If you are years away from retirement and want to lock in current prices for a retirement home, you can purchase your dream getaway with your IRA funds. This article explains how to do it.

This transaction is not for the uninitiated. You will need to set up a LLC which entails legal and accounting help, and manage the property as a rental until your retirement. You should also do a careful cash flow analysis as well as looking out for appreciation potential in your desired target area.

When the time comes for you to live in the home, you will have to take the full distribution of the value of the home in a single year. In a traditional IRA, this could result in a large tax bite. A Roth would not be taxable.

This could be a risky endeavor. Be sure to consult your tax advisor and attorney. Many people say they want to retire to a certain area and then change their minds once retirement hits. Also, be sure to understand the appreciation potential of certain communities as resort and remote areas tend to have unpredictable property values.

The bottom line is, this could be a way to finance the purchase of your retirement home if you are absolutely certain where you want to live in your golden years.