Subject To owned by SD-IRA?!

11 Replies

Question for the tax experts on BP!! I set up a SD-IRA and am considering the best approach for investing in real estate with the funds. I'm currently looking at a Subject To property that we would take over payments and hold as a rental. If the deed is transferred to my IRA Trust, is it acceptable to operate the rental from within that account? Thanks in advance!

Originally posted by @Erin M. :

Question for the tax experts on BP!! I set up a SD-IRA and am considering the best approach for investing in real estate with the funds. I'm currently looking at a Subject To property that we would take over payments and hold as a rental. If the deed is transferred to my IRA Trust, is it acceptable to operate the rental from within that account? Thanks in advance!

 I have a couple of investors from CA I sell Turnkeys to that do things that way. You have to make sure you have enough in the SDIRA to cover reserves. If the loan gets called you have to have an exit strategy already in place.

@Erin M.

Your self-directed IRA can buy an investment property subject to existing financing. The IRA custodian will be the new owner, on behalf of your IRA. The title will be held in a manner similar to this:

ABC Trust Company, custodian for Jane Doe IRA

You would hire a property manager to find the tenant and collect the rent. All rental income would be deposited to your IRA and all expenses related to this property (including loan payments) would be paid from the IRA.

@Erin M.

You should setup an LLC or checkbook control for your SDIRA too. If you don't, you are going to have to pay a fee for every transaction that happens. The fees add up fast and by having to go thru the custodian for everything it slows down the process too. Once do you have your LLC or checkbook control set up you can make the deal happen whenever it's best for you, you control everything about the process, there is no middle man, just a small quarterly fee.

thanks for the feedback everyone! Great advice. I do have a checkbook LLC set up! just wanted to be sure subject to was acceptable.


Also, I read that you can do basic property management (ie - finding tenant) for your own rental within SD-IRA (In Matt Allen's Leverage Your IRA book). @Dmitriy Fomichenko do you have any additional resources you could point me toward to do further reading on this?  Thanks!