SDIRA/LLC

[James Sanchez]

Partnering with ones self in an IRA/LLC, that is the IRA has 75% stake in an LLC and you have another 25% of credit or cash invested for repairs.

So, your IRA and you are the members of the LLC.

How can this be done or what to do to make this scenario work.

[Brian Eastman]

@James Sanchez 

Whoever you were listening to on the webinar is entirely wrong.  No if's and's or but's.  There is a lot of that kind of misinformation out there about SDIRA's out there, mostly from people trying to sell real estate or real estate "education".

While the strategy you propose is "possible", it is not something we typically recommend and certainly do not go out and aggressively market as some folks do.  We take a conservative approach to navigating the IRS rules.

Without going too much into detail, you have to treat the project as a joint venture from the get go, not start with one party and then bring in funds from the other party when you run out of funds.  You would capitalize the project and fund the purchase transaction as tenants in common, and establish the equity based on cash provided, i.e. 80/20.  You then need to handle all future expense and income transactions on that 80/20 basis.  There is more to it than that, but hopefully that will prepare you for your conversation with your legal counsel.