I am convinced that there will be a substantial market correction within the next 3 months. I’ve done well, no complaint. For my next investment, I plan to set up a trust, which will buy a house, which I will lease from the trust. Can I invest in the trust , as a self-directed IRA? I would then be able to make income 9going to a non-taxed IRA), and depreciate the real estate as well. Is this legal? How many accountants think this is a good idea?
I have absolutely no knowledge of US tax law, but my general answer to questions phrased like this is: If you have to ask, you know the answer.
and the stars o’erhead were dancing heel to toe
Nope. It’s “legal” to do it, but being legal and eing tax-exempt aren’t always mutually inclusive. You won’t get any extra tax breaks for it. I’ve never seen anything like this addressed specifically in the law, but the IRS will get a ruling that makes you pay taxes (in escrow) until they get the law changed. It’s double-dipping and the Feds usually try and disallow if they see it.
I really think you should consult a tax attorney.
-Melin
Wow, lots of tax questions recently. I am liking this trend.
Like Johnny Harvard said, it is most likely going to be looked at as double dipping. Anytime a person manages the version of a 401K where they are the sole participants, rest assured it receives greater scrutiny than normal.
Also, I can’t think of a specific law (or FASB statement, AICPA proclamation etc) that addresses this situation. But if you seriously plan on going forth with it, follow Melin’s sage advice and use a tax attorney.
I have the body of a taut, young Swedish boy.