Letter Re: How To Use Your IRA /401k to Fund a Survival Retreat Property

One of your letter writers about IRA funding of retreat property said that “you can’t distribute half a house,” therefore the distribution could be a big tax hit. You cannot use or live in an IRA owned property until you take 100% distribution and take the tax hit at tax time, it is true. However, you can take gradual partial distribution over time to make the tax hit more tolerable.

I have an IRA property that is a rental and the IRA ownership is currently 100%. I will start taking small distributions when I must at 70 and 1/2 years, if the rental income is not enough to qualify for the required percentage of withdrawals (this is dependent on your life expectancy per IRS tables). For example I could take 10% personal ownership of the property annually and the 10% value of the house is added to my taxable income for that year.

This may not help people who need to move to their retreat suddenly, but hopefully explains that distribution of property can be taken gradually. – A Colorado Reader