Do you need to be an entity if investing with SD IRA

2 Replies

Do you need to use commercial loan and/or purchase under an entity if you are using an investors self directed IRA for the 20% down payment? or if one person was cash and the other was SDIRA (no bank at all)? Also, when buying and selling with a self directed IRA, is there a similar process as 1031, or are you smooth sailing, tax wise? I plan to get friends and relatives on board with using this method but want to educate myself on the details first. Any other tips regarding SDIRA for real estate would be greatly appreciated.

@Matthew Wright

you do not need an entity to invest using self-directed IRA. However, depending on the types of investments you are planning to make you may want to use IRA owned LLC (aka Checkbook IRA) to gain the checkbook control over your retirement funds and to eliminate the fees (transaction fees, asset based fees, etc.) associated with having custodial SD IRA.

In most cases you don't need to do a 1031 tax deferred exchange in an IRA when selling a property because an IRA is already tax-deferred vehicle. 

The topic of self-directed IRA is frequent discussion here on the forum so I suggest that you search using the keyword and you'll get a lot of past discussions to read and learn from.

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