Financial Information
Have you been audited for reporting a loss on your self directed IRA?
Question : Have you been audited for reporting a loss on your self directed IRA?
I invested in real estate in 2005, but need to sell in 2009 or 2010. I believe the net loss will be aproximately 20k. I am worried that reporting that large of a loss will trigger an IRS audit, and I am wondering if anyone else has had a similar experience. I could hold on to the property for a few more years but it is steady losing money, and I sort of want to be done with it.
Yes I agree this is a rare occurrence. It is a self-directed IRA, not a traditional IRA.
self directed ira
Best answer:
Answer by the tax lady
IRAs don’t report losses.
If you do this properly there won’t be any references on your tax return.
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#2 written by hrblockerrolquinn 1 year ago
Dear Chris: IRA losses can be deducted in a very limited way. See IRS Pub 590 and Pub 550.
The contributions to the IRA must have been nondeductible and other requirements must be met. I would suggest some professional help on this one as it is a rare event.
Also look at IRS form 8606 for reporting.
Do not worry about the size of the losses as a lot of people have had large losses in the past couple years.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent
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Unless you have cashed in all your IRAs in the year of sale (assuming this is a traditional IRA – ALL traditional IRAs),and you have a net loss of ALL IRAs, you will not have a taxable loss at all.
It will not be reported on your tax return at all.
Helen, EA in PA