OnLine Purchases with split IRA and outside IRA investment

[Jeffrey A DeAngelis]

Howdy, 

If anyone has invested with funds from a self vested IRA and funds from outside an IRA - for instance, 50/50, how do you manage online purchases and split between the two?

For example. A STR purchased property at $100k and you put $50k towards the purchase with a self funded IRA and $50k outside of the IRA means that incoming rent and outgoing property improvements/upkeep are split 50/50 to stay within IRS compliance. If you purchase a new bed, fence, grill, cabinets or cleaning supplies (or whatever) say on Amazon for the property, you can't split payments with two separate cards for the improvement. Most online sites don't allow multiple cards for transactions. Any workarounds?

Thanks.

[Brian Eastman]

@Jeffrey A DeAngelis

Partnering between your IRA and personal funds is one of those things that exists on the internet and is {technically} possible, but is taking on a lot of potential risk.

If you wish to pursue such a strategy, do not rely on online resources and get an experienced tax attorney on your team.

Basically, there is 1 way it can go right and there are multiple ways it can go wrong, with severe tax consequences if that happens.

You do not partner between your IRA and yourself when you buy shares of a stock. This should be no different.

[John Underwood]

Quote from @Jeffrey A DeAngelis:

Howdy, 

If anyone has invested with funds from a self vested IRA and funds from outside an IRA - for instance, 50/50, how do you manage online purchases and split between the two?

For example. A STR purchased property at $100k and you put $50k towards the purchase with a self funded IRA and $50k outside of the IRA means that incoming rent and outgoing property improvements/upkeep are split 50/50 to stay within IRS compliance. If you purchase a new bed, fence, grill, cabinets or cleaning supplies (or whatever) say on Amazon for the property, you can't split payments with two separate cards for the improvement. Most online sites don't allow multiple cards for transactions. Any workarounds?

Thanks.

 I'd reimburse the 50% same day.

Likely the best way is have a PM split expenses and income 50/50 at the end of each month.

[Don Konipol]

Quote from @Jeffrey A DeAngelis:

Howdy, 

If anyone has invested with funds from a self vested IRA and funds from outside an IRA - for instance, 50/50, how do you manage online purchases and split between the two?

For example. A STR purchased property at $100k and you put $50k towards the purchase with a self funded IRA and $50k outside of the IRA means that incoming rent and outgoing property improvements/upkeep are split 50/50 to stay within IRS compliance. If you purchase a new bed, fence, grill, cabinets or cleaning supplies (or whatever) say on Amazon for the property, you can't split payments with two separate cards for the improvement. Most online sites don't allow multiple cards for transactions. Any workarounds?

Thanks.

First, you set up a REMOTE ENTITY to hold title to the property.  So you set up either an LLC or a corporation.  The retirement fund holds 50% ownership, while you or another entity you own owns the other 50%. The entity has a bank account in its names, and funds flow into and out of this account.  Profits are distributed from this account to the retirement fund and to yourself as owners.

While the above works theoretically, any mingling of funds or indication that you are paying expenses for the retirement fund can result in severe penalties . Should the IRS determine that the operation of the property is a BUSINESS rather than an INVESTMENT, a special tax (Unrelated Business Income Tax) will be assessed on your retirement account.  The way to avoid this UBIT is for the ownership entity to be a corporation rather than an LLC with the corporation paying the 21% corporate tax on its profits.  This may not be a viable solution tax wise depending on the specific investment