All Forum Posts by: Elizabeth Diskin

Husband and I set up two SDIRAs and merged funds into multi-member LLC to buy a vaca rental property for a slow flip (fix, rent a few years, sell when market looks good.) We are NOT borrowing any funds in this plan, so not worried about UBIT or other. We know we'll have to do 1065 filing b/c of the multi-member structure, but it still seemed easier and more economical than creating and maintaining 2 LLCs... since we dont' have plans for many members or lots of properties, etc. We're now learning that in IL there's also a partnership replacement tax that is essentially 1.5% of NET income, due each year. It's a none issue at first b/c we don't really expect NET income that first year, but in future years, if we net 20K, does it seem like a big deal to owe about 300$ in addition to our LLC maintenance costs? I'm guessing that's still less than the maintenance costs of filing and maintaining 2 distinct LLCs, (75$ each) though we'll also pay someone to file those 1065s forms (at least in year 1 and 2 to be sure we're doing it right) which we wouldn't have to do if we had two LLCs. I guess, long story short... does it seem like this is such a pain in the *** that we should spend more $ now and restructure, or this is no biggy? Also, wondering if anyone knows if MI handles partnerships differently. We are in IL but property is in MICH so maybe we could have LLC based out of there...? Just wondering if anyone has thoughts, ideas on the matter. Thanks!

Hi @Nicholas Aiola Here's a question... We've set up SDIRAs and created multi-member LLC to do a "slow flip"--rehab, do short-term vaca rental (3-5 depending on market), then sell and find the next. There may be additional small investments after a few years once the cash flow at property becomes predictable, but all advice I read re: this structure, and the tax paperwork we'll need to file each year is to "keep good records." Well, I'm not an accountant by trade, so i'm just wondering if there's a best practices to consider...software record or other method. What we're doing seems far less complicated than a lot of LLC investing, so I'd just assume create an Excel spreadsheet with starting balance in LLC account and track expenses re: to maintenance, management, and rehab each year, but I don't know if I'm making things easier or harder down the road re: filings or any (God-forbid) audit. Do I need to keep every physical receipt for every purchase/laborer, etc. or does the world of tech allow me to just store pics in cloud, etc? Any advice?

@Greg Scott Just following along in the comments, and I'm curious. Have you thought about moving some of your 401K $ to an SDIRA so you can invest in real estate? If not, I'm curious why. I've just moved some IRA money to do this...we're crossing fingers and hoping it all works out, as we've just penned first buy, but I too wanted some of our savings and future not to be trapped in stock market. Though I suppose that still...that money isn't touchable until at least 59.5... but at least you'd have some control. Thoughts? I'm the opposite of expert, so I'm not offering advice as much as learning more pros and cons.

We recently set up 2 SDIRA accounts (one for each spouse) and pooled funds to create a multimember LLC. The money has not yet been invested. It's sitting in new biz account in name of LLC. Custodian of SDIRA accounts needs our annual asset valuation for their tax purposes and I have received conflicting advise re: how to properly report. One person said each SDIRA account holder reports the TOTAL assets in the newly formed LLC, the other said to report only the SDIRA account's total assets in the newly formed LLC. So person A invested 200K, person B invested 100K. Each SDIRA account holder needs to file valuation report of "total value of the LLC"... do they both say 300K? or refer to their own funds? Going forward...once the $ is invested in real estate, are they each reporting only their share of the total asset or the actual total asset? I'm being redundant, I just want to be clear. Thank you!!