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$5500 per account, husband and wife with 2 accounts would be $11,000. Contributions can't be withdrawn for 5 years otherwise you face penalty. And nothing in life is known for sure.. As of right now its just the plan and the money would just be kept in a credit union savings account till we're ready to use it.
So you don't have past contributions from more than 5 years ago?
Before you jump onto IRAs.
How good are you with choosing investments? As that's what you will have to do with IRA. My IRA went up 32% - then plunged down this year to 32% loss and is hovering around 23-24% loss.
So how do YOU know same will not happen to your IRA?
I saw no indications of your age? "father" was mentioned as a handy man so you might as well be in your late 40s...
From what I know from my IRA, there are 2 penalties - early withdrawal 10% and 20% tax deduction. I am past the 10% one because of age yet...
Also, $10K is for the first home purchase, not for investment property purchase. Home as in - residence, primary. Investment comes with 0.5% higher interest rate.
But because of all that loss I had this year, I seriously started thinking about rather investing funds into SOLID real estate. Kinda along your lines.
So sure, if you can flip properties - go for it. It's a VERY risky business though and takes years to build expertise. Many started it and many lost it. But if you intend to simply buy and rent - take VERY cautious approach with that. And not with $10K.
Before you jump onto IRAs.
How good are you with choosing investments? As that's what you will have to do with IRA. My IRA went up 32% - then plunged down this year to 32% loss and is hovering around 23-24% loss.
So how do YOU know same will not happen to your IRA?
I saw no indications of your age? "father" was mentioned as a handy man so you might as well be in your late 40s...
From what I know from my IRA, there are 2 penalties - early withdrawal 10% and 20% tax deduction. I am past the 10% one because of age yet...
Also, $10K is for the first home purchase, not for investment property purchase. Home as in - residence, primary. Investment comes with 0.5% higher interest rate.
But because of all that loss I had this year, I seriously started thinking about rather investing funds into SOLID real estate. Kinda along your lines.
So sure, if you can flip properties - go for it. It's a VERY risky business though and takes years to build expertise. Many started it and many lost it. But if you intend to simply buy and rent - take VERY cautious approach with that. And not with $10K.
A deposit slip isn't the best source. Your custodian should be keeping records as they send it to the IRS. You can use your statement or tax form 5498
You're right, I do list it on irs tax form as well. I just keep the slip because I keep all my deposits. Neat scanner files it without me doing anything
Location: Was Midvalley Oregon; Now Eastside Seattle area
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Quote:
Originally Posted by ericp501
My wife and I have been researching getting into long term real estate investing for over a year. We think we'll be mentally ready to pull the trigger in 2017. Real estate investing seems perfect for us as we both enjoy it, I'm very good with my hands doing DIY projects with great results on discounts, my father is a handy man and always more than willing to help me, and I have a family member who is a real estate attorney (helped my buy my first home without an agent for free). My question is, from a financial retirement standpoint is it okay to not put anything into a Roth IRA this year to have the extra cushion for the purchase.. should I just look at it as diversifying my portfolio and stop overthinking it? I could maybe do both, but it would push back the purchase timeline and again I like the idea of the added cushion if need be.
Sounds OK. Economically you are really saying that you see more financial opportunity doing RE vs Roth. Besides you enjoy it, which is the greatest benefit.
As a point of reference:
We are retired, more than enough money.
Sold off equities in Discretionary IRA/Roth with the probably the last sell, yesterday. I just don't think that the risk/rewards are worth staying in the stocks. I value passbook savings more. It's an economic choice.
My wife and I have been researching getting into long term real estate investing for over a year. We think we'll be mentally ready to pull the trigger in 2017. Real estate investing seems perfect for us as we both enjoy it, I'm very good with my hands doing DIY projects with great results on discounts, my father is a handy man and always more than willing to help me, and I have a family member who is a real estate attorney (helped my buy my first home without an agent for free). My question is, from a financial retirement standpoint is it okay to not put anything into a Roth IRA this year to have the extra cushion for the purchase.. should I just look at it as diversifying my portfolio and stop overthinking it? I could maybe do both, but it would push back the purchase timeline and again I like the idea of the added cushion if need be.
That's what we did - forgo the much touted 401(k).
We took out 15 year loans with the idea of not taking any money out of the property for 15 years. At that point the properties were paid off, and our total investment was zero.
Then things reversed. Cash flow to us became very strong and we used the extra money to pay off our primary dwelling. Retired, now, with paid off rentals and paid off primary dwelling. Have not had renter turn over in years.
Observations:
*Buy good properties. Most people buy old houses and then don't maintain them. We built ours new in 1987.
*I think most people do it wrong. They take out 30 year loans and try to make a few dollars while carrying the mortgage. Better, I think, to do it the way I described.
*Our properties are fully depreciated. We view the properties as a sort of warehouse for money. When we get too old or tired of it we can always sell them and use the money for what we need. Or want. Yes, we'll pay taxes.
* It's better for us that we keep a lot of cash in the bank instead of a 401(k). The properties have appreciated nicely and we want to be able to use our cash as a sort of shock absorber. We're glad we did it that way.
* We could sell the properties and carry the note, thereby escaping a big tax year. The income would be about the same, but with no responsibilities.
BOL!
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