JV, SDIRA, UBTI, IRS, Partnership Contract, Legal Entity

[Kishore P.]

Hello All:

My partner (Realtor) and I plan to get into a 50-50 % partnership by pooling our individual financial resources to invest as equal partners in a Residential Rental Duplex.

Background about JV:

• Acquisition Price for Duplex: $ 100,000 with an estimated Rehab Cost: $ 20,000.00.
• Estimated Rent/Unit/Month: $ 700.00
• Equity: 20 % and pay for the Rehab ourselves and finance the rest.
• Goal: Cash flow by renting for the Duplex with Property Management coming from Partner
• FYI, My investment is going to be coming from a Self Directed IRA.

Question:

• (a) What do you propose I formulate a partnership that will prevent the SDIRA from being declared as Undeclared Business Income Tax (UBTI) by the IRS?
• (b) I've also told that if Capital is funded by IRA then the Equity Stake has got to be a minimum of 40 % ?
• (c) If (b) is correct then would I suggest to partner to bring in 40 % Equity as well to maintain the 50-50 partnership to keep it simple?
• (d) Referral for Banks that do non-recourse loans?
• (e) At some point in the future if I refinance and take my cash out and return capital back to the SDIRA, will my share of the Revenue be Tax-Free because it was funded from my SDIRA or should my SDIRA continue to have equity stake in the venture to continue Tax-Free Dividend/Income.
• (d) Would make sense to form LLC for this Joint Venture?

Any input from experienced individuals is highly appreciated.

Thank You
Sincerely

Kishore. P