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Using retirement accounts for alternative investments in real estate and natural gas

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  • Using retirement accounts for alternative investments in real estate and natural gas

    I was recently advised to convert my TSP to an IRA in order to participate in alternative investment as an accredited investor to take advantage of real estate depreciation or natural gas tax deductions. However I was previously told to never give up my TSP as it contains some of the lowest fees to be able to utilize funds within it as part of overall portfolio. Thoughts?

  • #2
    You’re being sold something that I wouldn’t buy.

    Why do you need real estate depreciation in a qualified retirement account? Same story for natural gas tax depreciation within an IRA. Just makes no sense.

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    • #3
      Hank is correct that losses generated by real estate or gas depreciation is worthless in an IRA and one of the arguments against holding real estate in an IRA. IMO the only reason to hold real estate in an IRA is if it's your main investable asset and you want to diversify out of the stock market but tax deductions isn't a reason to hold real estate in an IRA.

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      • #4
        Yeah, that makes zero sense.

        Not only does holding those assets in a tax-advantaged account negate the purported tax advantages of those investments,it's also been proposed to disallow any assets that require certain criteria (including accredited investor, qualified client / purchaser) from being held in any IRA.

        So even if it would make sense to do that, which I don't think it does, now would be a terrible time to make that transition.

        Keep what you've got in the TSP in the TSP.

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        • #5
          I would advise you to not do that so now that should even out the previous (awful) recommendation.

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