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Investing in real estate with an IRA isn’t much different than investing outside of an IRA.
There are a few minor differences and some rules to be aware of, but Equity Trust, with our 45* years of self-directed IRA experience, strives to make the process easy.
See how the process works within a self-directed IRA.
4 Steps to a Self-Directed IRA Investment
1. Establish and Fund an Account with Equity Trust Company
For most accounts, all you’ll need is a signed application (this can be done online with myEQUITY), a copy of your driver’s license, and method of payment.
To fund your account, deposit new cash or move funds from an existing 401(k), IRA, or other retirement savings plan to your new account with Equity Trust.
Rollovers and transfers can take time, so it’s important to initiate funding immediately. Investment opportunities come and go quickly and preparation is everything.
2. Find a Property to Purchase
After you’ve identified your preferred investment and are ready to make a purchase, complete our simple direction of investment form with details about the investment; such as how much it costs, and where to send the funds – and we’ll take it from there.
Before investing make sure you know and understand self-directed IRA rules and regulations.
3. Direct Your Custodian to Purchase IRA Investment
Once we review and process your direction of investment form, we send funds from your IRA to purchase the investment per your instructions. For safekeeping, we retain all-important records like deeds, notes, and operating agreements.
What to know about titling
You and your IRA are two separate entities, and as such, the investment needs to be titled in the name of your IRA and not you personally.
The correct title for most real estate IRA investments is:
Equity Trust Company custodian FBO (for benefit of) [YOUR NAME] IRA
4. Manage the Investment In Your Account (How Income and Expenses Flow)
All payments/profits related to an investment in your self-directed IRA must be made from your IRA and return to your account. In addition, all expenses related to your investment must be paid from your self-directed IRA.
Recap: Steps to Investing in Real Estate in an IRA
If you’re selling the property, negotiate the sales terms and complete an investment form instructing us to sell on behalf of your IRA. Proceeds from the sale return to your self-directed IRA tax-deferred or tax-free, available to you again for future investments.