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Updated over 9 years ago on . Most recent reply
Self Directed IRA
What is the best way to utilize a self directed IRA to purchase and flip homes?
I have a client that asked me this question tonight and I was stumped. Please help!
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#1 New Member Introductions Contributor
- Solo 401k Expert
- Anaheim Hills, CA
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#1 New Member Introductions Contributor
- Solo 401k Expert
- Anaheim Hills, CA
@Account Closed
First you need to set up self-directed IRA and fund it.
Second, you identify the investment and coordinate with your IRA custodian to purchase it.
More convenient way of handling this is to use what's known as Checkbook IRA (IRA owned LLC) or truly self-directed Solo 401k where you as the trustee of the plan are in control.
Keep in mind that flipping homes out of your IRA most likely will be considered as active business and profits will be subject to UBIT (Unrelated Business Income Tax). Be sure to consult with knowledgeable tax expert on this subject.
An alternative to that is to use retirement account as the source of funds and provide financing. This way you don't have to mess with the UBIT.
The subject to SD IRA and Solo 401k has been discussed here on the forum many times so be sure go back and review related posts.
- Dmitriy Fomichenko
- (949) 228-9393
