Self Directed IRA
The Self-Directed [SD] Individual Retirement Account [IRA]
An individual retirement account [IRA] helps you to earn and earmark funds for retirement savings, as well as to shelter those savings from certain taxes and lawsuits. Self-directed [SD] gives you the power to directly choose the investments of the IRA.
A Self-Directed Individual Retirement Account Investing in Real Estate Enjoys the Following Advantages:
SD IRA affords investing in the stability of real esate in relation to stocks
- SD IRA can purchase real estate using all cash, leveraging, or partnering with another investor, trust, or partnership
- SD IRA loans protect your personal assets in the event of default or foreclosure
- An SD IRA enjoys faster growth via the combination of real estate appreciation and cash flow
The Process of Real Estate Purchase with a Self-Directed IRA
Here is a general overview of the process of purchasing property with SD IRA Funds.
Find a property with a professional REALTOR
Your REALTOR will create the purchase agreement which is the offer on the property in the name of the SD IRA and send that offer to your custodian
- Transfer funds to an SD IRA custodian
- With your permission, your custodian will release funds for purchase - the purchase agreement does not constitute authority
- Your SD IRA custodian will sign at closing - you will own the deed
- Your SD IRA custodian will distribute the funds appropriately
- You will make management decisions
- The rental income and expenses will be handled within the SD IRA
Regulations of Real Estate Purchase with a SD IRA
You can purchase real estate from anyone except the persons listed below. You can lease to anyone except the persons listed below.
- Your spouse
- Your lineal descendants and spouses of descendants (children, sons-and daughters-in-law, grandchildren, etc.)
- Your parents, grandparents, great-grandparents, etc.
- Anyone providing services to the IRA and their families
- Any company, trust, or partnership in which a disqualified person holds 50% or more interest and or voting power
- Any fiduciary of the IRA
Siblings are not considered disqualified persons. Your custodian will be able to guide you if you have questions.
