Passive Income question

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TMCD75
Posts: 257
Joined: Mon Jan 26, 2015 4:36 pm

Passive Income question

Post by TMCD75 » Mon Jul 18, 2016 4:20 pm

I own two rental properties that are paid off and I would like to dump that passive income into my Roth IRA. My understanding is that I can't invest passive income into my Roth.

Why can't I do this? Tax laws are ridiculous...

delamer
Posts: 5819
Joined: Tue Feb 08, 2011 6:13 pm

Re: Passive Income question

Post by delamer » Mon Jul 18, 2016 4:24 pm

TMCD75 wrote:I own two rental properties that are paid off and I would like to dump that passive income into my Roth IRA. My understanding is that I can't invest passive income into my Roth.

Why can't I do this? Tax laws are ridiculous...
You can invest pennies that you pick up off the street in a Roth, as long as you have earned income in an equal or greater amount (and meet other requirements).

ralph124cf
Posts: 1986
Joined: Tue Apr 01, 2014 11:41 am

Re: Passive Income question

Post by ralph124cf » Mon Jul 18, 2016 4:38 pm

If you have earned income, then you can put in up to your earned income or the ROTH limit.

If you have no earned income, then start an S Corp. and put the properties into the S Corp., and pay yourself a salary. An accountant would know the easiest way to do this, as there a number of hoops to jump thru. The paperwork might not be worth it, but it is possible.

Ralph

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Ever Ready
Posts: 294
Joined: Sat Feb 24, 2007 3:21 pm
Location: DC metro

Re: Passive Income question

Post by Ever Ready » Mon Jul 18, 2016 4:44 pm


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