Self directed IRA questions
Hi, I'm planning on creating a self-directed IRA with checkbook control, and moving enough money into it to purchase two rental properties. I've talked to and read information from several LLC SDIRA companies (Broad/Guidant/etc.) along with others who offer only custodial SDIRAs, and I feel confident that I would prefer the LLC SDIRA. I have several questions, but the companies I've talked to or visited all seem highly biased towards the products they're offering and biased against the 'competing' products, so I hope I can get some better answers here.
The biggest question I have regards taxes on the LLC. Some people say that with an LLC SDIRA, you have to do a full tax preparation every year and pay taxes just as if it were a 'normal' LLC. Others say that's not the case -you don't have to do a tax return for the LLC. Which is correct?
Another difference between the custodial SDIRA and LLC SDIRA regards the valuation of the IRA at the end of the year. The custodial folks say that the LLC has to get an official appraisal, while the LLC proponents say that I just have to send my own estimate. Again, which is correct?
The non-LLC companies are also saying that the IRS is going to come down hard any year now on LLC SDIRAs with massive fines, total loss of the value of the IRA, etc. As long as I'm totally above board on all of my transactions and have all of my receipts, documentation, etc., is there really anything to worry about?
Finally, is it true that with a custodial (Non-LLC) SDIRA, that with rental property you MUST use an independent management company to manage the property? I'm planning on managing it myself, which is the main reason I want the LLC SDIRA.
Thank you