Permalink Submitted by Alan - IRA critic on Tue, 2023-06-13 19:56
You should be using a self directed IRA custodian whenever you purchase real estate using IRA funds. There is always a major risk of violating the IRS “prohibited transaction” rules, and you self directed custodian can provide you with advice on how to avoid many possible prohibited transactions, any of which would result in a distribution of your Roth IRA balance. But to answer your question, you must pay any repair costs, taxes, legal, insurance etc for this rental from your Roth IRA and your Roth IRA will include the rental income you receive. That means that the Roth must have a cash balance beside the value of the rental to provide liquidity to pay these costs, and the rental income can be a source of the liquidity. You cannot pay repairs from your outside funds, nor can you do the repairs yourself.
Permalink Submitted by Alan - IRA critic on Tue, 2023-06-13 19:56
You should be using a self directed IRA custodian whenever you purchase real estate using IRA funds. There is always a major risk of violating the IRS “prohibited transaction” rules, and you self directed custodian can provide you with advice on how to avoid many possible prohibited transactions, any of which would result in a distribution of your Roth IRA balance. But to answer your question, you must pay any repair costs, taxes, legal, insurance etc for this rental from your Roth IRA and your Roth IRA will include the rental income you receive. That means that the Roth must have a cash balance beside the value of the rental to provide liquidity to pay these costs, and the rental income can be a source of the liquidity. You cannot pay repairs from your outside funds, nor can you do the repairs yourself.