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Updated almost 7 years ago on . Most recent reply

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William Castiglione
  • Saint Clair Shores, MI
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Self directed IRA questions?

William Castiglione
  • Saint Clair Shores, MI
Posted

Questions for you self directed IRA Gurus:

Can I buy a property as the following:

50% my own cash (under an LLC)

50% of my self directed IRAs LLC

Is this legal? And if it is, can my personal LLC withdraw 50% of the profits (rent, gains at sale) legally?

Does it make a difference if the arrangement is more:

70% IRA LLC

30% cash LLC

Do you have to buy properties full cash outright with a self directed IRA, or could my IRA/myself get a commercial mortgage?

Since myself (cash, under LLC 1) would be a normal entity, could that portion of ownership gain the tax benefits of depreciation, etc that a normal investment would have? (I know the IRA LLC does not benefit from these tax advantages)

Sorry guys I’ve tried googling this stuff and I cannot find great answers on this scenario. 

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Brian Eastman
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
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Brian Eastman
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
Replied

@Account Closed

The starting point of "he has an old SDIRA from his employer" sounds fishy to me.  Most employer plans are not self-directed and capable of investing in real estate.

The deal you propose could work in a self-directed IRA. There are certainly some complexities such as exposure to taxable UDFI (unrelated debt-financed income) on the leveraged returns. The transfer of the asset, with the sub-to note and pending tenant option deposit will also be somewhat complex and perhaps difficult under a custodian managed self-directed IRA.

A self-directed IRA LLC or Solo 401(k) that would offer the investor checkbook control would be much better suited to this transaction.

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