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Making Self Directed IRA Real Estate Investments
By Adam D. King Platinum Quality Author
 

If you have a self directed IRA real estate is one option that you should have for investments. The problem is that most custodians do not offer their clients the real estate option. In a truly self directed IRA, you would think that you could invest in whatever you want, but that is not always the case. The key is finding the right custodian.

In order to meet IRS and other government requirements, you must have an account trustee or custodian. This person is responsible for filing the appropriate paperwork and making transactions, among other things.

In a traditional IRA, the custodian makes investments, with your approval. In a truly self directed IRA, the custodian performs the transactions, as directed by you. The only consideration should be whether or not the transaction fits into the parameters outlined by the laws that govern the IRA.

Self directed IRA real estate investments must fall within those parameters, just like any other type of investment. Some custodians feel that there is a "gray" area in the law when it comes to real estate, but it's really pretty simple.

You cannot use your IRA to purchase real estate for your own personal use and the property cannot be used by your family members. Purchases must be for investment purposes only.

Any funds required for maintenance or improvement of the property must be made with IRA, not personal funds. By the same token, self directed IRA real estate investment profits must be returned to the IRA. Otherwise, the profits would be subject to capital gains and/or income taxes.

In the truly self directed IRA, you can buy property, build, repair, remodel, resell, rent out...just about anything that you can think of. A knowledgeable custodian helps to insure that your transactions are allowed by law.

Equity Trust is a good choice for self directed IRA real estate investing. Each custodian is familiar with the dos and don'ts. One of the "don'ts" has to do with advice.

In a truly self directed IRA, the custodian is not allowed to suggest or persuade you to make this or that investment. That kind of advice could be construed as self-dealing, which means making transactions with IRA funds in order to benefit the broker or brokerage.

If you are unfamiliar with real estate investing, you may need some help on that front. They say that real estate is always a good investment, but not all real estate deals are profitable. If you have a good eye, you can grow your retirement funds quickly. If not, well, you could be stuck with swamp land.

Luckily, there are experienced investors that are willing to advice you about those self directed IRA real estate investments. They can help you find the deals that are most likely to be profitable and avoid the hassles and the headaches. With a little help, after just a few deals, your IRA may be growing faster than you ever dreamed possible.

 
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