Roth IRAs and Real Estate Investments
By: Richard Reichler
By Richard Reichler
The “Roth IRA” is a form of long-term, tax-free investment that may be well-suited to those who believe that real estate assets are now priced for future appreciation.
The tax consequences of Roth IRAs are different from those of regular IRAs. Contributions to a Roth IRA are not tax deductible, but all of the “qualifying distributions” received from Roth IRA are free of tax. Thus, at the cost of not obtaining a deduction for the money placed into a Roth IRA, appreciation of the assets will escape any tax until distributed. Moreover, the tax rules permit much more time to elapse before requiring a distribution from a Roth IRA than is allowed for either an accumulation in a tax-qualified plan, such as a 401(k) plan, or a regular IRA. The required minimum distribution rules do not apply to a Roth IRA during the owner’s lifetime. If the surviving spouse treats a Roth IRA of the deceased spouse as his or her own, there are no required minimum distributions during the spouses’s lifetime…