Has a financial advisor recommended self directed IRA real estate? Using money in your IRA to buy real estate can boost your portfolio’s performance. Since you can rent the property, it could become a source of passive income. Plus, you’ll still accrue the benefits of appreciation while holding it.
Self Directed IRA and Real Estate
It’s not hard to use the money in an IRA to invest in real estate. If there’s not enough in your IRA to complete the purchase, you may use a non-recourse loan. Since the IRA holds these, you’re not on the hook for them. By doing this, you may have to pay unrelated business income tax on the account, though.
Owning Property in an IRA
Nobody in your family can have owned the property before adding it to the plan. Otherwise, it would be considered a prohibited transaction, making it illegal. Also, you must hold onto the property until you’re at least 59.5 years old. Getting rid of it before then would be against the account rules, and you may get in trouble.
Maintaining Property Held by an IRA
While you own the property, everything must be paid with funds from the IRA. Your account’s trustee will help you manage it all most of the time. The trustee can sign where it asks for a signature on any forms since they’re your representative. As long as you pay fees from the IRA, you’ll be in good shape once it’s time to unload the asset.