IRA for Real Estate Investment

Submitted by Daniel Fruchter on Mon, 2018-10-08 19:52

How do I properly use my roth IRA or my Inherited Traditional IRA (which needs a RMD taken yearly) to invest in a single, solitary real estate property ? The property has nothing to do with me in terms of any personal connection to it- no conflicts of interest, it is not a property that I own, live in or vacation in. It is a property that my investment broker will use my IRA money to buy my portion in it and return the money with capital gains. I am 36 years old

Information from a website:
“When you set up your Self-Directed IRA or Solo 401k, you’ll also be opening an accompanying checking account at the bank of your choice. This checking account will serve as the platform for you to purchase and manage investment properties.
When you’re ready to purchase a property, just write a check from your dedicated account.
In short, the property is owned by your IRA or Solo 401k, it is managed by you (on behalf of your IRA or Solo 401k), and all transactions go through your IRA or Solo 401(k)’s checking account.”

Is it that simple? Is there a need/ability to assess the property value each year to report the value of my IRA….?

A clear, tried and tested path/answer for how to do this would be appreciated.

Thanks

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Permalink Submitted by Alan - IRA critic on Tue, 2018-10-09 02:12

Suggest you get detailed information from a major self directed IRA custodian. These people deal with such accounts on a 24/7 basis and can provide you with educational material and answer questions. However, you should know that investing in individual rental properties comes with forfeiting valuable tax benefits such as depreciation and other deductions and lower LT cap gains rates when you sell. You also need a large enough IRA balance to pay all associated costs such as repairs, insurance, prop taxes, legal expenses etc from the IRA account. The IRA custodian is required to report the year end value of the IRA in January of every year, and the custodian may require periodic appraisals (also paid out of the IRA) to determine that year end value.