Engineer · Fawn Grove, PA · Member since 2015 · 93 posts · 10 votes
Good Morning All!!
I hope everybody has a wonderful Memorial Day Weekend.
OK . A peer of mine has a rental property in his self-directed IRA. He want to sell it / I would like to buy it. His IRA will hold the note. Apparently the title will remain in the custodial IRA's name.
How would this affect my ability to take advantage of all the good tax benefits of rental property?
Since the title is still in the IRA's name, would i be subject to any of the liability if the tenant falls and breaks their arm, etc?
Should i try to get the title changed to the IRA and my LLC?
If it is an installment sale the property will stay in the Ira name until the last payment is made and then the deed transfers at that time. If it is a straight closing and sale and the Ira holds the note and mortgage and the property is deeded to you or your LLC at that time.
There are benefits for doing it both ways. I’m not sure why you want to do the installment sale but that is between you and the seller and your attorneys. This is not an Ira issue it is done in and outside of IRAs.
If someone sued you and wins then yes your leveraged asset is vulnerable in either case. In either case there most likely would be a public record showing the transaction and parties involved.
With exception of some closing costs being pushed to a later date the Tax benefits from my experience has been the same in either case to my knowledge but check with your accountant.
Engineer · Fawn Grove, PA · Member since 2015 · 93 posts · 10 votes
7y
@Carl Fischer
Thank you
another general question regarding self directed IRAs. the above property is in my IRA, however, it needed some additional repairs that i had to pay out of pocket. Can these repairs be put on my personal taxes in some way to recoup this money?
I hate to be the one to tell you this, but you have engaged in a prohibited transaction and voided your IRA. You are a disqualified party to the IRA and may not transact with the IRA or co-mingle funds as you have.
Find yourself a tax attorney and be prepared for a big hit.