Case Outline: When Mr. Jones became a client of ours he was 48 years old and in the process of a divorce. His ex-wife was to acquire the family home in the divorce settlement and Mr. Jones now had to determine where he was to live. Purchasing a home in a neighborhood of his liking, with enough space to accommodate his three children while they were in his custody, was out of his financial reach. Although Mr. Jones had the necessary down payment for the home of his choice-his income, after taking into consideration the addition of child support payments, was not high enough for him to qualify for a loan large enough to purchase the home he wanted. When Mr. Jones found us through surfing the web, he came to us with the idea of using his IRA as an additional down payment to reduce the loan amount necessary to purchase the property of his choice so that his income would now qualify him for a loan.
*However, to apply an IRA in this way would violate several prohibited transactions which would in turn cause excessive taxes and penalties. Our IRA Real Estate to Occupy Investing Strategy aka the "OUTSIDE™ method", on the other hand, does allow for non IRA monies to be coordinated with IRA monies and it does allow occupancy of the real estate by the purchaser. Therefore, we were able to structure a plan for Mr. Jones placing approximately $183,000 of Mr. Jones' IRA in a SAFE HARBOR®-Directed IRA™ (SHIRA™) account to create the structural foundation for his IRA/real estate plan. Because of the downside protection and upside potential earnings of his SHIRA™ account, we structured the account to to provide an income stream to be using towards paying Mr. Jone's mortgage payments, allowing him to have more cash flow as well. Any tax liability generated by this income stream was calculated to be offset by allowable tax deductions.
Summary: In short, by implementing our IRA Real Estate to Occupy Program (OUTSIDE™ method) and placing Mr. Jones' IRA in an interest earning SHIRA™ account, we were able to structure a plan to meet Mr. Jones' goals and objectives. Mr. Jones now had the needed additional income to qualify for the loan he required to continue the standard of living he was accustomed to, while at the same time, safe guarding the principal value of his IRA and investing for his future.
"I WOULD LIKE TO EXPRESS MY APPRECIATION AND GRATITUDE FOR THE SERVICE LASAII HAS PROVIDED ME. I HAVE BEEN ABLE TO MEET MY GOAL OF HOME OWNERSHIP, WHICH I NEVER THOUGHT POSSIBLE AFTER MY DIVORCE. I THOUGHT I WOULD BE UNABLE TO AFFORD A PLACE OF MY OWN, BUT WITH THE OUTSIDE METHOD, I HAVE BEEN ABLE TO USE FUNDS I DIDN’T THINK I COULD ACCESS. YOUR SERVICE HAS MADE MY LIFE SO MUCH BETTER. I AM LIVING IN A RESORT-STYLE COMMUNITY THAT I THOUGHT WAS WAY OUT OF REACH. THANKS AGAIN."