Are you thinking about using your self-directed IRA to invest in real estate?
No matter your experience level, investing with a self-directed IRA calls for a little self-education. Quest Trust Company is here to help you in the process, and make sure you understand everything you need to get started.
You Cannot Benefit from the Property Before Retirement
When purchasing real estate using self-directed IRA funds, there are certain rules that come along with the property. You cannot live in the property or benefit personally from it in any way. This includes you, your family, and any other disqualified person such as service providers of the IRA. You also cannot earn personal compensation, so if you are a real estate agent, commissions aren’t allowed on the purchase or sale of these properties.
Due Diligence is a Must
As the account owner, you are personally responsible for all investment choices. Quest Trust can’t provide any tax, legal, or investment advice, but you can talk to a tax professional or investment advisor before you purchase property using your self-directed IRA. Quest Trust can help you after any relevant discussions you have with outside sources.
Do Not Work on the Property From Your Own Pocket
While mowing the grass, fixing up the interior, or doing general maintenance on your self-directed IRA real estate investment may seem tempting, be sure not to pay for it from anything other than your IRA funds. There are rules and regulations which state that funds from your IRA must be capable of paying for the expenses of the property. So, with that, it is important to ensure that your IRA has these needed funds before purchasing a property.
Know the Tax Rules
Like all other expenses of the investment, property taxes must also be paid using IRA funds. It is important to fill out tax documents correctly in order to ensure the proper funds are being used.
All of these points are important to keep in mind when investing in real estate via a self-directed IRA, and we urge you to do your research. As always, Quest Trust Company is here for you. We work diligently to foster relationships with our clients and put you first. Unlike other companies, we offer three administrative options, giving you the most flexibility over your investments. We work hard to process transactions within 24-48 hours and offer multiple services for free. Feel free to contact a Quest IRA Specialist with any questions.