First joint venture purchase with SD IRA's

[Michael Clanton]

Hi fellow BP members! This is my first posted question, so please bear with me!

My dad and I recently used our SD Roth IRA's for the first time to purchase an investment property in SC that we plan to flip. The property was purchased with funds from 2 of my dad's IRA accounts (25% and 50%), and my IRA makes up the other 25%. We did not have an LLC set up for this investment, mainly due to our timing. Our IRA's are with Equity Trust.

My question is, is there a way around having to have 3 checks written out (one for each account) for every expense? Maybe not necessarily on this property since we have already purchased, but I was wondering what would be the best way to avoid this going forward?

Thanks in advance for any input!

[Brian Eastman]

@Michael Clanton

Equity Trust will need to issue one check per account in the correct fractional amount.  If you had a general contractor doing work on a draw basis, you could minimize the amount of check by having that contractor paid once or twice during the entire rehab process, instead of individually paying for each project/sub-contractor.

Such a JV with IRA's belonging to disqualified parties is a complicated ordeal, and not something we would generally recommend. Be sure to have a qualified tax attorney (not the customer service team at ETC) review what you are doing to ensure you are within bounds.