Hi - I have seen a lot of posts for people considering using their rolled-over IRA to buy rental homes, but I wanted to see if there was input on buying land. Strictly land, with no plans to do anything with it but maintain it. I understand the rules about not staying on it as it will be owned via an IRA, paying expenses and receiving any benefits right to the IRA, no sweat equity, etc.
Here is my my situation. I live in a development of all 3 acre homes. Directly behind my house is a 75 acre piece of property in "preserved farmland" protection; meaning it can support one potential home and can only be used to farm or to generate solar on a small piece. I have a hunch it will be up for sale in the next few years. My wife and I are 37 with very retirement heavy portfolios. Combined, we are just under $1m. I suspect the land could be had for $500k; effectively using half of our retirement savings.
Is this a sound investment idea, or is this too risky or radical?
Here are what I consider the benefits:
- Hedge against stock valuations and dollar/inflation
- Diversification in assets
- While we can't use it to the extent we'd like, we'd benefit from being able to ride an ATV around it to check on it, or to have the kids sledding on it
- Potential leasing of land to farmers (who can maintain it) as well as solar, as there is electric access up and down the road
- We'd live next to it, it would feel like an ext. of our property, it could theoretically be broken up into smaller parcels
- Both of us can continue to fund our 401's generously, and we have other savings set aside as well
Here are our concerns:
- Spending 45% of our retirement money on a hard asset just feels strange given everything taught
- The complexities of setting up the self directed IRA/Checkbook LLC
- Going foul of the IRS laws will be difficult given our properties are connected
Submitted February 19, 2021 at 07:00PM by tommyboy319 https://ift.tt/3uaa4db
