The real estate IRA process is an easy one for you because professional
services are necessary to create the account. Basically, your part is to complete an application and supply a copy of your current driver's license.
A custodian or administrator of your choice establishes the account per
IRS regulations. IRA Custodians know the
rules and offer investment options. They'll do all the work and be at your side thru the process. They maintain the assets, records of transactions,
statements, files IRS reports, and perform administrative duties on behalf of the IRA account.
Fund your IRA account by moving funds from an existing IRA or 401(k), other retirement savings plans, or with a cash deposit. Allow significant time for all the transfers and rollovers to take place.
Fund your investment by completing a direction of investment form which includes details about the investment property, price, and where to send the funds. Your custodian processes the request and takes care of the rest.
Yes, it's that easy.
The IRS and the SEC both have guidelines and rules that govern the
use of IRA accounts. With a little advanced planning you'll stay within
the boundaries and you won't worry about penalties or income taxes.
One of the IRS rules is about disqualified parties and self dealing. Which basically translates to You are not permitted to buy a home, vacation property, or office space with IRA funds that you plan to live in or rent to direct family members. Also buying and selling properties from yourself is not allowed.
If the funds are used to buy rental properties.
A big no no is paying yourself a management, repair, or service fee. However, you can pay a fee to a management company that manages the property for you and all other service providers. And that's exactly the point we try to make, put systems and people in place that do the work for you.
Always pay expenses like, property taxes, association fees, general bills, repairs and improvements from the IRA account.
Always deposit income and profit for the property into the IRA account.
Always, take title to the investment property in the name of the IRA account.
If you want to use other peoples IRA accounts. The SEC is particular about the wording used for advertisements. It's important to never advertise for lending or loans but it's ok to advertise for buyers who want to use or are already using their IRA account for funding real estate.
With your IRA custodian in place, you'll be able to turn your business into a wealth-building machine that secures your future and maximizes your retirement account.
Pro Tip: Plus, you can write off the fees associated with setting up the real estate IRA account.