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What Name To Put Utilities in for Self-Directed IRA Purchase
I am closing on a home through my Self-Directed IRA. I will need to transfer the utilities from the previous owner for about a month while I am having some rehab completed. What name do I put the utilities under, personal or IRA? I've been told that when using an SDIRA for a real estate investment all expenses must be paid out of the SDIRA account so I'm wondering if I need to place the utilities in my account name. If I placed them in my personal name, would this be a violation?
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You should confer with your custodian. If they will allow you to put the utilities in the name of XYZ Trust Co FBO your IRA, that would be correct. The utility company may or may not be able to do that. The naming on the account is not as critical in a situation like this as where the payments come from. Payments must be made directly from the IRA and you absolutely should not pay any expenses of the IRA's investment personally.
This is one of the little details that is a drawback of trying to use a custodian managed IRA for a complex asset such as real estate.
A self directed IRA LLC or Solo 401(k) trust solves this problem by creating an entity you can control, which can be listed on utilities, insurance, etc. and for which you will hold the checkbook.