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Real Estate

Couple Discovers Partnering IRAs to Purchase Real Estate

January 10, 2018
It’s important to have a lot of exit strategies.
Laurel, Real Estate Investor

Self-Directed Investing Growing in Popularity

Laurel found that she had to educate some of the people involved with transactions about self-directed investing. For example, when she closed on one of the investment properties, other parties at the closing weren’t familiar with the unique titling required on the purchase agreement associated with a retirement account.

On top of that, the IRA was partnering with another entity, which resulted in a purchase agreement most title agents don’t often see.

Investment titling was one of a few differences when using a self-directed IRA (the property is titled in the name of the IRA), but Laurel says she wasn’t intimidated by the process.

“Sure there’s a learning curve, but there’s a learning curve about everything in life,” she says.

Continuing to Build Wealth with Self-Directed IRAs

Laurel plans to continue to make self-directed investments and gradually add more properties to her Roth IRA. Her goal is to “grow my IRA so that it can buy a property outright, without partnering with my LLC,” she explains.

If Laurel is able to use just her self-directed IRA on a purchase, all investment profits would be in the tax-advantage account, with hopes it will grow future wealth.

But for now, she is content successfully partnering her Roth IRA and her LLC to purchase real estate.

No. This is considered a prohibited transaction (see IRC 4975).

When you’re ready to sell a property that’s owned by your IRA, you need to request the original documents from Equity Trust. This is done by completing an investment form, which can be found on myEQUITY. Once the property has been sold, all funds from the sale must be deposited into your IRA. These funds must be sent to Equity Trust with a payment coupon.

No. This is considered a prohibited transaction (see IRC 4975). You may not purchase a property, or interest in a property, that’s currently owned by a disqualified person, which includes yourself.


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