The Real Estate IRA
This includes, at a minimum, real estate or real estate related assets such as:
- Single or multi-family rental property
- Retail shopping centers
- Office buildings
- Other mixed-use commercial or industrial property
- Medical office buildings and other outpatient facilities
- Senior living facilities
- Raw land
- Private Mortgages
- Tax Liens
- Options on real estate
- Set up a self-directed IRA at a self-directed IRA custodian – You will have to find a custodian that is suitable for this type of transaction. It is highly likely that your current broker-dealer will not be capable of handling this type of transaction. If you are looking for a list of some leading Self-Directed IRA Custodians and Administrators, there is a list below for your consideration.
- Fund your account – You can do this by either contributing to your IRA, transferring funds from one of your other IRAs, or you can roll over a 401(k) that you have elsewhere.
- Locate the investment property that you want to invest in with your IRA – Find a great investment that works for you.
- Do not personally sign any documents – This is very important. You will not be the owner of the property, your IRA will, so your IRA would have to sign for it.
- Close on the property – This works like a typical closing except that your IRA would be doing the purchasing.
- Ongoing maintenance – Now that your IRA has acquired the property, you can start benefiting from your expertise as a real estate investor. There are several maintenance items that you should be aware of. Some of these are covered below.
- You cannot put real estate that you already own into your IRA. This would be considered a prohibited transaction (see below). It must be a new investment from a third party.
- Prohibited transactions – A prohibited transaction is the one thing that you should be most careful of. A prohibited transaction is what happens when you break one of the rules. This could cause the investment to be considered a distribution from your IRA, and thus you would have to pay the taxes and penalties on that distribution. We highly recommend that you work with a professional financial advisor, attorney and accountant who has experience investing in real estate with self-directed IRAs.
- Disqualified persons – A disqualified person is someone who cannot personally benefit from the real estate investment in your IRA. Seek advice on this from your financial advisor or tax professional.
- Work with a qualified CPA from the beginning to avoid potentially being taxed on investments in your IRA. Yes, this can happen. It can just as easily happen with stocks and other publicly traded investments as it can with real estate. While this is not common, it is possible. If you want to know how this affects you, make sure you seek help from a financial advisor, attorney, or tax advisor who is experienced in this area.
- Allowable alternative investments – Your IRA can invest in virtually any asset that is considered an investment. However, there are three exceptions. You cannot invest in Life Insurance, S-Corps, or Collectibles.
|
Accuplan Benefit Services
|
Advanta IRA
|
American Estate & Trust
|
|---|---|---|
|
American IRA
|
Bank of Utah
|
CAMA Plan
|
|
Central Bank of Utah
|
Chicago Trust Administration Services
|
Community National Bank
|
|
Entrust Group
|
Equity Trust Company
|
First Midwest Bank
|
|
Forge Trust
|
GoldStar Trust Company
|
Horizon Trust Company
|
|
iPlan Group
|
IRA Express, Inc.
|
IRA Financial Trust Company
|
|
IRA Innovations
|
IRA Resources
|
Kingdom Trust Company
|
|
Liberty Trust Company
|
Madison Trust Company
|
MidAtlantic IRA
|
|
Mainstar Trust Company
|
Midland IRA
|
Millennium Trust Company
|
|
Mountain West IRA
|
Nevada Trust Company
|
New Direction Trust Company
|
|
Next Generation Trust Company
|
NuView Trust Company
|
Premier Trust
|
|
Pacific Premier Trust (Pensco Trust Company)
|
Polycomp Administrative Services
|
Preferred Trust Company
|
|
Provident Trust Group
|
Quest IRA
|
Real Trust IRA Alternatives
|
|
Security Trust Company
|
Sovereign International Pension
|
Specialized IRA Services
|
|
Strata Trust Company (Self Directed IRA Services)
|
Sunwest Trust
|
uDirect IRA
|