Self directed IRA investing

3 Replies

I have a few IRAs. I have a Roth, traditional, and a self directed IRA that I hold precious metals in. I am thinking about transferring money from my traditional into a self directed IRA to buy and hold property. I have a few questions though.

1 Can I use the same self directed IRA that I hold the precious metals in?

2 I only have enough money in the traditional IRA to be used as a down payment on a property. If I need to add more money to the IRA, because of unforeseen expenses, will that be legal? Currently I am only allowed to add $5500 per year.

3 If I sell the property to upgrade, would I have to do a 1031 exchange even though it is already in a tax deferred account?

4 Is there a better approach to IRA investing?

Randy,

If your IRA is truly self-directed then yes, you can use it to buy rental property. You can add funds in your IRA either by making new contribution which as you stated is limited to $5,500/yr or by transfer from another qualified retirement account. 

@Randy Dulac

I would open a seperate IRA for real estate because of the liability associated with real estate for asset protection reasons and not use the precious metals Ira

@Dmitriy Fomichenko answered the "adding money" question right on. In addition, Your Ira can borrow money with a non recourse loan.  If this loan is still in place when you sell you can use a 1031 exchange to postpone or eliminate the Unrelated business income tax and/or unrelated debt financed income tax that would be due as a result of your IRAS Non Recourse loan. 

There are several different approaches with self direction and a little account- wholesale the deal, Ira can partner with another, JV, etc. PM me if you need more details or options of what some of our clients do.

@Randy Dulac

There are generally two ways to get money into an IRA:

1. Make annual IRA contributions if you have earned income:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

2. Transfer other IRAs for former employer funds to the IRA.

https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions

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