Pretty rare so I am guessing not, but thought i'd throw it out there.....
Anyone ever bought a farm thru a self-directed IRA?
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I feel like Hardwood11 has talked about this before on a land buying thread.
Hardwood11
It is going to be a good fall!
Yes..I have 40 acres in a Self Directed IRA. You can convert an IRA or 401k to a SD IRA … and then buy real estate.
Some tips:
I’d recommend income generating real estate, but not CRP.
I’d advise not to take a loan out with your IRA or you could trigger a tax.
Most banks/bankers do not understand Self Directed IRAs !
I’m semi-knowledgeable about it, so you can PM me if you want more information. There is also a management fee every year so keep that in mind !
Hardwood11
It is going to be a good fall!
The government is not high on sending CRP checks to the IRA? At least in my case that was the case.
Slick
Well-Known Member
So i have given this idea some thought from a tax standpoint and fortunately my wife deals in taxes. We looked at it from an individual vs IRA standpoint. Lots of variables to numerous to list but the one huge advantage to the IRA would be the ability to sell a farm when prices are stupid high and not have to worry about a 90 day sec 1031 repurchase. Then hold that money as long as you want and buy more land when prices get better. It can give you the luxury of time. Unless there is some rule i am unaware of.
I hadn't even thought of that. That would be fantastic.
I will be converting a 401k to a IRA in 2023 and if I could go into dirt, that would be my preference.
deerdown
Well-Known Member
Who gets the management fee?
Slick
Well-Known Member
A firm like this.....there are many....
www.madisontrust.com
Self Directed IRA Basics
With a Self-Directed IRA, you can invest in options like real estate or cryptocurrency, not just stocks. Diversify your investments by setting up a Self-Directed IRA or Roth IRA with Madison Trust today!
www.madisontrust.com
nemohunter
Member
If you buy land with your IRA can you use it yourself without penalty?
Cannot be used for personal use. How they would police that... I have no idea.
Slick
Well-Known Member
Guessing that is more geared for rental property purchases.
Can def buy farm ground with it. A highly tillable piece would be ideal.
I talked to my CPA on got some contacts for Iowa.
This is something I will look hard at when I move my 401k.
justinkarns
Member
As I understand it, you nor your family can have any connection with the property, period. Not even to manage / repair the property. Everything must be managed through a custodian and contractors. Can't imagine how it would be enforced on a land / hunting perspective, seems like they'd have bigger fish to fry. A good friendly custodian surely would be beneficial.
We've looked into this for the ability to have some control over your own retirement funds.
Hardwood11
It is going to be a good fall!
The way around that is to buy a farm with you owning half and your IRA owning the other hand . Example 80 acres … 40 in the IRA, and 40 owned personally.
I’ve owned land in an IRA since 2007-08 ? They don’t check, they don’t set out cameras to see if you use the property. Mine is a 1/2 mile off the road .. how would they ever know ?
I once stepped on my IRA 40 but quickly realized what happened and then jumped back onto the non-IRA part and thankfully no IRS agent saw me (sarcasm)!!
But anyway, there are options. Also once you hit 59 & 1/2 the rules change .
I’ve owned land in an IRA since 2007-08 ? They don’t check, they don’t set out cameras to see if you use the property. Mine is a 1/2 mile off the road .. how would they ever know ?
I once stepped on my IRA 40 but quickly realized what happened and then jumped back onto the non-IRA part and thankfully no IRS agent saw me (sarcasm)!!
But anyway, there are options. Also once you hit 59 & 1/2 the rules change .
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justinkarns
Member
Good to hear, thanks for sharing!
Hardwood11
It is going to be a good fall!
You could use your IRA as a sanctuary as well ? Or … a 40/80/120 acres of all crop that you don’t hunt ?
Lots of options . One of best ways Is to rent crop land out and check goes right into your IRA account. You can’t legally farm it, or probably not do food plots. Must be cash rent or crop share.
Lots of options . One of best ways Is to rent crop land out and check goes right into your IRA account. You can’t legally farm it, or probably not do food plots. Must be cash rent or crop share.
I have helped on a few farms that were self directed IRA, lots of rules for sure.The offers were written and then signed by the Custodian in this case it was a bank. The IRA must have the funds to buy the entire parcel. In one case we had to split off a 40 and pay for that with other money and not title it in to 401. I was not aware of the exclusion from a gain therefore not needing a 1031. One huge benefit I have seen is the CRP cap is separate from the individual. My guess is FSA treats 401 as its own ”person”.