SDIRA LLC Real Estate Transactions/Partnering with your Business

[Roger Hall]

Hello!

Looking for guidance on appropriately partnering my SDIRA LLC with my business LLC for a real estate purchase on a fix-n-flip. My understanding is that this partnership can take place, despite being a disallowed person, as long as the partnering takes place at the time of purchase. I would be using the SDIRA LLC as essentially gap funds for the difference that my business LLC falls short despite a hard money loan being utilized for securing the property.

1) Is this transaction permitted, and would the SDIRA LLC be subject to UBIT since a hard money loan would be utilized on the property even if flowing through the business LLC? Or does that not matter for a hard money loan since it's secured by the property of which both LLCs are partnering on when it comes to UBIT?

2) Let's say the split was 20/80 or 10/90 (SDIRA LLC/Business LLC) does it matter who pays which expenses (for instance EMD, closing costs, rehab costs, mortgage payments, utilities/insurance, etc.) as long as the equitable split remains the same for the transaction expenses and the profits upon resell?

3) Is a separate agreement between the SDIRA LLC and business LLC required for the equitable split or does the title company handle that process during closing?

Thanks!