Innovative Strategies
Market News & Data
General Info
Real Estate Strategies

Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal



Real Estate Classifieds
Reviews & Feedback
Updated about 1 month ago on . Most recent reply

SDIRA: The Secret to Explosive Growth or a Risky Investment? Seeking Your Expert Advi
I'm thinking about using an SDIRA to invest in real estate and other alternative assets, but I’m torn—can an SDIRA really unlock the kind of growth I’m looking for, or is it a risky move with too many complications? If you've used an SDIRA for investments, what’s been your experience? Any tips or red flags I should know about?
- Robert Ellis
Most Popular Reply

I agree with @Marty Sprong. Investing in an SDIRA can be a great way to grow your retirement nest egg and do incredible things, but you have to follow the rules and regulations. If you do engage in a prohibited transaction with your SDIRA, the SDIRA will be considered nonexistent as of January 1st of the year the prohibited transaction took place in. That means that the entirety of the assets in the IRA becomes taxable income to you that year and is subject to an early withdrawal penalty of 10%.
Once you apprise yourself of prohibited transaction rules and you have decided to move forward with real estate investments, it is important that you properly structure your long-term rental so that your other SDIRA assets are not affected by the property liability. You can do that by holding your real estate in an LLC owned by the SDIRA. You can be the manager of the LLC, but you cannot take any fees or salary for doing so, no payment at all, actually, because of the prohibited transaction rules. You cannot manage the asset itself, as @Marty Sprong mentioned, since that is also a prohibited transaction. You hire property managers to do so, however.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.