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Self Directed IRA Question - Expert/Experience Needed


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Does anyone have any experience with Self Directed IRAs and real estate investing?


I've got some money in a company retirement fund I'd like to roll over into a self directed IRA (when I get laid off soon), but I'm needing a custodian and some advice on investing in a shopping center I'm building.



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Dave McReynolds

It is possible to find a custodian who will administer an IRA that invests in real estate. They will charge fees for their services that exceed the IRA administration fees charged by a stockbroker or a bank, as they are not making commissions from the sale of securities or otherwise earning income from your IRA funds as a stockbroker or bank can. Real estate owned by an IRA must be debt-free, i.e. no mortgage. There can be no prohibited transactions between the IRA and the beneficiary of the IRA, so whether an IRA can invest in real estate that you or a company you control is developing is problematic. As a CPA in general practice, if I had a client who wanted to do that, I would refer him to an expert in that subject.

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Thanks Dave, that's good information.


I agree, I think my problem area will be the fact that I'm developing the shopping center. So, I'll need to find an expert to nail down whether or not there's a way to do this.

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Are these two separate goals - the shopping center, and the IRA?


Typically, company retirement funds are in a more restricted group of investments. By that, I mean you can only invest in the funds they offer. Usually not so with the self-directed IRA's offered by brokerage houses.


If these are separate endevors it is a bit more cut and dried. If they are intertwined it seems very complex.

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If you are committed to investing 401k/IRA funds into a self directed IRA for investment property, look at forming an IRA funded LLC. This usually lowers fees fees and offers corporate protection to your assets plus you get check book control of the funds :thumbsup:.

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Unfortunately, Internal Revenue Service regulations will not let you use the real estate owned by your IRA as your residence or vacation home. Nor can your business lease space in your IRA-held property. The underlying premise for any real estate investment purchased with IRA funds is that you can’t have any personal use or benefit of the property. To do so may cost you plenty in taxes and penalties.


From this website.

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Thanks for the info guys. Looks like in this case it's not possible for me to use my IRA to invest in my shopping center, as I own the land I'm building it on. I'll keep looking though, and if anyone is or knows of an expert in creative financing (legal of course) let me know.


One thing I can do is loan myself money from my existing plan, but I'm limited to borrowing a maximum of $50,000, which is only a small percentage of the plan's worth.

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