Can you manage properties held by your self-directed IRA? Assuming you do none of the hands on work? Same question for managing the rehab.
What if your SD IRA owns part of the property but you provide property management? Again, doing no hands on work yourself?
Example: your SD IRA buys 33% of a property via a JV. You oversee the rehab, lease up, and ongoing management? Kosher? If not, what are some ways to make it work?
Jon, I would check with the IRS on this but my take would be no and here is why. You are a disqualified party to your IRA as is any entity you own with a 50% or more interest. If your IRA owned 33% and you partnered with your IRA (which can be done but tricky) taking the balance ownership, I believe the IRS would look at that deal as the IRA owner benefiting and thus not allowed, however, I could be wrong on this so I would definately check into it.
Even if the IRS gave the green light, I would be shy on doing deals like this as it comes to close to the gray areas and IRA funds are not worth risking when you can make money without the very same risk and problems. That is my take on it.
@John Klaus
Yes the rules allow the IRA participant to manage property owned by the IRA provided you do not receive compensation. This is often the case with an IRA LLC since the manager of the LLC is the IRA participant. Another common retirement vehicle that is often used to invest in real estate is a solo 401k where it is also common for the solo 401k trustee (typically the business owner) to manage his or her real estate investments but does not receive compensation for doing so.
Following are the similarities and differences between the solo 401k and the self-directed IRA.
The Self-Directed IRA and Solo 401k Similarities
The Self-Directed IRA and Solo 401k Differences
Hello and welcome to BP! I tend to agree with what others are saying. Whether you get paid or not you are, hopefully, adding to the value of the property's value and benefit from that. Other things that was not mentioned is the Social Security Company. A government based company would not pay attention to you and allow any benefits is you could not work for a disability because you have no compensation that shows you have been paying them tax money if that is recent enough. I am speaking from being turned down twice by them and an attorney firm because I owned my own business and chose not to pay myself. I was never told that rule but that did not matter eventhough I was employed for about 35 years before that but it was considered too old.
I had chosen not to pay myself for about 5 years and filed tax returns when I owned my own company and did not pay myself (directly) for about 5 years because my wife was making decent money and her salary could sustain us. It is amazing how many people spend their time on how they can cheat the government especially when all of the circumstances are not known. I may be 60 years old but the government and the Texas Real Estate Corporation has proved to me, after they told me I had to start all over after having a broker license for about 30 years and paid them about 30K and that most companies and the owners of them only care about income and turn down expenses when they are complained to.
I have not been able to walk for a little over 6 years and those two companies do not care. I bet you have never been told that about the Social Administration. My wife has been saving money for about 25 years which has taken some stress off of me. That and the fact that we have about 200K of equity in our house has helped me some but being turned down by those two governments-based companies is sad.
Good luck to you!