Today’s REI Classroom Lesson

Larry Goins goes over the how-to’s of converting a traditional IRA to a Roth IRA, tax free.

REI Classroom Summary

Larry runs through a scenario for us that includes you purchasing a property in a traditional IRA and what to do so that you can move it to a Roth, without showing equity.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Larry: Hi, this is Larry Goins, today’s trainer on REI Classroom. I’m really excited today because what I have to share with you is something I’ve had hundreds, literally thousands of people ask me how to do. Now, this is a very advanced technique so it’s probably something that you’re not going to do if you haven’t done any deals before. But today, I’m going to show you how you can convert a traditional retirement account to a Roth retirement account without paying tax.
Mike: This REI Classroom real estate lesson is sponsored by FlipNerd Investor Coaching, your blueprint to investing success.
Larry: Now, just like anything else, you want to seek your own counsel, talk to your own advisors before acting on anything. But here is the way that I have been taught by attorneys, CPAs, and even tax attorneys. What you do is, you start out with your traditional retirement account. Let’s say you have $100,000 in that account. Now, what you do is, you’re going to make an investment of a property. Let’s say you’re going to buy five properties at $100,000 each and then what you’re going to do is, you’re going to borrow 80% on each one of those. So now, you have five properties worth $100,000, and you have 20% equity in each one and you owe $80,000 on each one.
So now what you do, then you go get an evaluation done by a certified appraiser that does this for retirement accounts and for the IRS, and typically, not every time, but typically, the valuation for that type of purpose would be lowered. And I’ve seen them 15%, 20%, 25%, 30% lower. Let’s just say that the valuation for each property came in at $80,000 on that property. So now, you have five properties that you basically have zero equity in. So now, you can convert that over to a Roth retirement account with zero equity showing and you will pay zero taxes on it.
Now, like I said, seek your own advisor. I’m not giving tax advice, but that’s the way I’ve been taught to do it and now you can do it, too. My name is Larry Goins, author of the best-selling book, “Getting Started in Real Estate Day Trading” and “HUD Homes Half Off!” If you’d like a free copy of “HUD Homes Half Off!”, go to Thanks a lot and I’ll see you next time.
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