IRA Supports Purchase of Florida Vacation Home
Cases featured in this section are actual case histories of IRA/real estate plans structured by Uranga & Associates. Names have been changed to protect the privacy of our client(s).
Case outline: Mr. Collins is 39 years old, married, owns a primary residence and is an institutional trader. Believing real estate in Florida to be attractively priced he decided the time was right to purchase the vacation home he and his wife had dreamed of owning one day. Mr. Collins first heard of the OUTSIDE™ method of investing in real estate from searching the web. Having always believed an IRA could only invest in traded assets, (stocks, bonds, money market, and mutual fund shares), Mr. Collins was intrigued with the idea of being able to reallocate his IRA to support the purchase of real estate that he, his wife and family could enjoy now, during their active years, rather than having to wait until retirement before gaining any benefit from their hard earned savings. After completing the Compatibility form on the Uranga web site Mr. and Mrs. Collins had a telephone meeting with an Uranga consultant to more thoroughly understand how the OUTSIDE™ structure could apply to their scenario and determine if it was suited to their situation.
The Collins’ decided to allocate $100,000 of their IRA to the purchase of their $89,000 vacation home. Using $21,000 of non IRA monies for the down payment the Collins’ obtained a second home mortgage in the amount of $68,000 to finance the balance of the purchase price. To establish the structural foundation of the IRA real estate plan Uranga & Associates assisted Mr. Collins in transferring his allocated IRA monies to a SAFE HARBOR® IRA account. This SAFE HARBOR® IRA account, with a potential to earn 5% or greater as a ten-year average, also insures against loss of principal value due to investment exposure during the life time of the plan. Uranga & Associates then structured Mr. Collins’ SAFE HARBOR® IRA account to provide a reliable monthly income stream to be used to make the mortgage payments. Any tax liability generated by withdrawals from the IRA was calculated to be offset by allowable real estate tax deductions, resulting in a zero tax outcome.
Summary: The implementation of the OUTSIDE™ structure of IRA real estate has enabled the Collins’ to purchase a vacation home for their personal use within a secure financial framework. Believing to have bought their real estate in depressed market conditions the Collins’ anticipate to eventually benefit from an attractive rate of appreciation while at the same time earning interest on the principal value of their IRA, a financial strategy they believe will help support their eventual retirement. Additionally, the enjoyment they expect to experience from the use of their vacation home over the next many years is priceless.
