Investor Help (NO Ihub questions)

[cintrix]

I've never done it but there are RE trusts for IRA's:

Real estate. While the guidelines on real estate, particularly leveraged real estate, are not as clear as some CPAs might like, clients should be able to use IRA funds to invest in real estate—a much overlooked and underused opportunity. While the brokerage, mutual fund and banking industries have fully exploited the IRA concept, the real estate industry seems to have missed the boat.

An IRA investor may be able to leverage real estate purchased in an IRA if the transaction is carefully structured. While it can be a problem for an IRA owner to borrow from an IRA, investing in leveraged real estate—with the IRA trust holding title to the assets—may be allowed if the property seller holds the mortgage in the IRA trustee’s name. In such situations the borrower of the funds is not the IRA owner but, rather, the IRA trust. In addition, the IRA owner cannot be held liable for additional recourse on leveraged assets held in the IRA. (The IRA trust agreement should make note of this fact.) Because this is an innovative approach not commonly practiced, a CPA should encourage the client to obtain a letter ruling from the IRS before purchasing real estate leveraged with IRA funds.

It’s important to remember that any debt in an IRA must be serviceable through liquid assets held in the IRA or through the $2,000 annual contribution. And although some of the tax advantages of real estate (deductible interest or depreciation) are lost in an IRA, IRA funds themselves are already tax-advantaged. In addition, deductions offset income, which helps in complying with the unrelated business income tax rules (IRC sections 512 and 514) applying to leveraged real estate. All gains are tax-free in an IRA—nothing is taxed until it is distributed. With a Roth IRA, even distributions are tax-free. This allows investment-oriented real estate to fulfill its growth potential unfettered by federal and state taxes.

The best types of real estate for an IRA are cash deals (transactions leveraged directly with the seller also might work), specialized real estate mutual funds and real estate investment trusts. Limited partnerships probably are not advisable (because of IRC section 511, discussed below). Rental property may be permissible as long as there is no personal use of the properties involved.

Real estate must be solely an investment; the taxpayer or related parties cannot use it in any way. The taxpayer should purchase the real estate so the trust holds title to the asset (some organizations will act as trustees for nontraditional IRA assets). Since the percentage of IRA assets that can be used for real estate has not been given a “bright line” test by the regulatory authorities, it seems safe to say any amount is acceptable.
http://www.journalofaccountancy.com/Issues/2000/Apr/TheDosAndDonTsOfIraInvesting.htm