The 7 key points include:
1. Your IRA Cannot Purchase Property Owned by You or a Disqualified Person.
2. You Cannot Have “Indirect Benefits” from Property Owned by Your Self-Directed IRA.
3. Titling Your IRA – You and your IRA are two separate entities. As such the investment needs to be titled in the name of your IRA—not to you personally. All documents related to the investment must be titled correctly to avoid delays.
4. Real Estate in an IRA Can be Purchased without 100% Funding from Your IRA.
5. IRA Investments that use Financing Must Pay UBIT
6. Expenses Must Be Paid from Your IRA.
7. Real Estate IRA Income Must Return to Your IRA
Other things to consider:
✅ Rental income may fall under UBTI which can cause other headaches – Unrelated Business Income Tax
✅ The IRA owner is unlikely to be able to recognize taxable losses in the IRA
✅ The IRA owner is unlikely to be able to take depreciation expense
✅ The IRA owner may have to recognize taxable income, even when the real estate is in an IRA
✅ You may be turning long-term capital gains into ordinary income
✅ Per IRS requirements, the IRA must valued each year by 12/31, requiring an appraisal fee each year – which must come from the IRA.
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https://www.investopedia.com/articles/personal-finance/111615/using-your-ira-buy-investment-property.asp
bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx [4/26/18]
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