BACKGROUND: I would
like to buy a farm in Maryland and live on it myself. I would like to use the
money in a rollover IRA account to purchase the farm and some equipment. I see
that a C corp is what I need to form but I’m confused about how to use my money
to purchase the property. A solo 401k cannot be used because I want to live on
the farm and I’m disqualified. The same would be true about a self-directedIRA.
There is also an office,
woodshop and apartment for rent on the farm property. The actual farmhouse will
be rented for about 9 months until the current tenant’s children get out of
school next June. And then we would move into it.
Some of the farm land will be rented
out to other farmers for the first few years and if that works out it may
continue for as long as they need the land.
QUESTION:
Is there a way that I can form a C corp, use my rollover IRA money to finance
the C corp to purchase the farm and allow me to live on it.
ANSWER: While you can invest your retirement funds in a farm in which you will work (commonly referred by the IRS as roll over business startup), you cannot use your retirement funds to purchase a farm on which you and/or your family will live.
Regards,
John in Maryland
