Creative IRA Utilization ~ Effective Estate & Tax Planning
Enjoy your money, while it's working for you. With your IRA or 401k rollover supporting the purchase of a vacation home, you have the intrinsic value of use while at the same time the potential to build equity in your property.
Income potential from vacation rentals
Many people choose to rent out their vacation home for short-term rentals. This income goes to you, not your IRA. Depending on the ratio of rental days to personal use there could be further tax advantages.
With the income tax liability on your IRA satisfied by the conversion to real estate your eventual tax obligation will only be for any increase in value upon the sale of the property. This will be taxed at the significantly lower rate for capital gains rather than the ordinary income tax rate you would have been liable for on the entire amount should the property have been purchased by the INSIDE method.