Don’t forget to set up your new solo401K by December 31. You can set one up at ThinkorSwim.com in just a matter of hours. Probably take a lot longer than that if you’re using your solo401K to invest in real estate, but you’ll be glad you did.[photopress:fat_cat.jpg,thumb,alignright]
Check with your CPA or Attorney. PenscoTrust or Guidantfinancial have excellent educational sites for good strategies for self directed retirement planning. It’s well worth learning and understanding if good tax planning is your goal.
Good news, bad news. We just did some great tax planning – closing on an investment property sale with a $45k loss on December 21st. It should eliminate our entire income tax liability for the year. We managed to even sell without a real estate agent, so saved a significant amount on the closing costs (6%).
Bad news – we lost half our equity. At least we are protected from further declines!
Did your CPA say that you could write off your capital gains losses against your ordinary income. Might want to check. Of course, if your investment was ordinary loss, then you were either in the business of developing real estate or you held under a year.
2 other points. Just because you saved the 6%, how much less did you take in selling price to save that 6%. It would be interesting to know. There’s no question it’s difficult to sell now. I wouldn’t want to try selling any stocks either. I wish I was as positive as you about absolutely knowing the future.
You can generally offset capital losses against capital gains, but any capital loss in excess of 3,000 over the capital gains needs to be carried forward.
Good question on saving 6%. It’s also possible though that if they sold FSBO they sold for over FMV (no agent to protect the buyer).
The only statistics we have on FSBO’s is that they received 78% of what listed homes sell for.
So, Ashley will not be able, therefore to offset her ordinary income gains with her capital losses, which I believe she thought she could.
Millennium Trust Company (http://www.mtrustcompany.com/services/ira/real.asp) located in Oak Brook, IL, custodies real estate in self directed IRAs or Solo 401(k)s. They can educate you on the process. Try contacting Sandra Reese at sreese@mtrustcompany.com for more info.