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A Self-directed IRA allows you to manage and direct the interests in your IRA. Since 1974, the IRS has permitted individuals to "self direct" their retirement investments made within their IRA's. However you need a regulated institution as your "Custodian". You can invest your IRA in most real estate related properties. |
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Raw land |
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Single family home |
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Apartments |
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Commercial Real Estate |
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Mobile homes |
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Timeshare |
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Property purchased through an auction or tax sale |
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Foreign Real estate, but the plan can invest its interest in LLC or limited partnership which may purchase the foreign real estate |
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| 1. To prevent the self-dealing transaction, such as: |
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Sale, exchange, or leasing of any property between a plan and a disqualified person |
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Lending of money or other extension of credit between a plan and a disqualified person |
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Furnish of goods, services, or facilities between a plan and a disqualified person |
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Transfer to, or use by or for the benefit of, a disqualified person the income or assets of a plan |
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Act by a disqualified person who is a fiduciary whereby he/she deals with the income or assets of a plan in his/her own interests or for his/her own account. |
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Receipt of any consideration for his/her own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan. |
| Examples of Prohibited Transaction/Self Dealing: |
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With yourself - having your IRA purchase real estate that you own presently |
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With a family member of lineal descent - having your IRA purchase real estate that is owned by your father |
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Personal use of IRA property - using real estate purchased through your IRA as an office, personal residence, vacation home, and retirement home or office space. |
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Receiving personal benefits from your IRA - lending yourself money from your IRA. |
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Paying yourself, or a company that you own, to do work on a home purchased by your IRA |
| 2. The Plan cannot invest in the S corporation, but the plan can invest in the LLC or limited partnership |
| 3. If you engage in a prohibited transaction, all the special tax benefits accorded IRA are lost. That means the entire IRA will become taxable to you as of the first day of the tax year in which the transaction occurs. |
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The Accountholder owner |
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The Accountholder spouse |
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Ancestors (mother, father, grandparents)* |
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Lineal descendents (daughters, sons, grandchildren)* |
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Spouses of Lineal descendents (son-in-law or daughter-in-law)* |
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Investment advisors |
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Fiduciaries - those providing services to the plan |
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Any business entity such as partnership, corporation, Trust or LLC in which any of the disqualified persons identified above has a 50% or greater interest |
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