Richard Reichler, counsel to Meltzer Lippe’s Tax & Tax Controversy, Trusts & Estates, and Wealth Preservation & High Net Worth Planning Practice Groups, is the author of “Roth IRAs and Real Estates Investment,” an article published in Real Estate Taxation.
Noting that Roth IRAs are often appropriate investments for those believing that real estate assets are priced for further appreciation, Mr. Reichler observes that “the tax consequences of Roth IRAs are different from those of regular IRAs. Contributions to a Roth IRA are not tax deductible, but all of the “qualifying distributions” received from the Roth IRA are free of tax. Thus, at the cost of not obtaining a deduction for the money placed into a Roth IRA, appreciation of the assets will escape any tax until distributed. Moreover, the tax rules permit much more time to elapse before requiring a distribution from a Roth IRA than is allowed for either an accumulation in a tax-qualified plan, such as a 401 (k) plan, or a regular IRA.”
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