Untaxed Money Question
Im sure there is no easy anwser for this but here goes....So I convinced on of my relatives to loan me 150k at a wonderful 5.0% interest only rate for REI purposes. HOWEVER, she has her money in an IRA-type insurance fund which yields 4.5%/yr. The money has not yet been taxed by uncle sam.
My question is this: Is there any way for me to use this money without paying taxes? AND if I must pay taxes on the money before I can use it, will it only be capital gains or both personal income and captial gains. Thanks so much for any input....Tom
You do not have responsibility to pay any tax on the money since it is not income to you. She has the responsibility to pay tax on the income to her.
Sorry for the misunderstanding. I want to set it up so she does not have to pay the tax. [ Edited by cashmonster on Date 02/08/2006 ]
Thanks Mantis,
The account is an IRA, not IRA type account. I will look into setting up a self-directed IRA asap....
Regards,
Tom
I have been investigating...guident financial claims this is entirely possible. They will set everything up for 5k. That may sound steep but the 5k includes a corporate structure , operating aggreements and the money transfers.
Has anybody used them (guident financial) and has an opinion??? Thanks for reading....Robert[ Edited by cashmonster on Date 02/09/2006 ]
The answer depends upon the relationship of the relative....
If it is a parent or dependant, no can do. Sibling, no problem. The person has to not be a disqualified person as per IRS rules. The penalty for a prohibited transaction is 100% so be very very careful.
She may be able to pull a loan against her IRA and give the money to you, then you can repay the loan + any additional interest. This may or may not be possible, but could be an option to look at.
Thanks for all the replies....
So I have been speaking with a nice fellow over a guident financial and they have a program called the Audeo program.
Basically the set up a special 401k that my relative (mother) would transfer the money into. The 401k would then buy stock from the corportion, thus funding it, and me and my partner could use the cash tax free and recieve a salery. There are specifics like for instance my mother would have to be a part-time employee of the company, etc......sounds interesting and perhaps worth a shot. I will follow up on this post once I sign up and everything goes smoothly (or not)....Tom
What if the interest rate was 0% for the first year, still not worth it??????????
This is a great program. I am a business broker and have guided buyers to use this service. The advantages are that IF the business fails, creditors cannot take the assets in a 401 which actually owns the business. I just went through the whole program with Guident. They are great, a lot of crediability. If you would like to discuss feel free to call 816.421.9300 Ritchey Wetzel-Business Sales and Consulting, LLC in Kansas City
Quote:
On 2006-02-16 22:34, cashmonster wrote:
Thanks for all the replies....
So I have been speaking with a nice fellow over a guident financial and they have a program called the Audeo program.
Basically the set up a special 401k that my relative (mother) would transfer the money into. The 401k would then buy stock from the corportion, thus funding it, and me and my partner could use the cash tax free and recieve a salery. There are specifics like for instance my mother would have to be a part-time employee of the company, etc......sounds interesting and perhaps worth a shot. I will follow up on this post once I sign up and everything goes smoothly (or not)....Tom