All Forum Posts by: Loren Whitney

@Edward C.  If your currrent 401(k) will allow you to take a loan out, that is one option for personal gains.

Do you already own the property being rehabbed? Also, do plan on doing the rehab work yourself? These are important questions if you plan to involve the IRA. Without knowing more, I'll just say that if this is already tied back to you personally in anyway, it would be best not to proceed with your self-directed IRA. If this is an arms-length investment that will require nothing more than decision making capacity, there might be an opportunity for the IRA to participate. Tell us more about the structure, who's involved, and what the end game looks like.

Thanks for the input everyone. I've contacted my local glass company and they me that they'll know almost immediately what resulted in the 'cause' of the break. Either way, it's getting fixed. Cheers.

Hey All, 

My tenant just shot me a message with a picture of a broken window (nice right). He says, "Not sure how this got here but last time I opened the blinds it wasn't there". I haven't been over to the property yet but i know thermal breaks are quiet rare, especially on a dark side of the house. Can anyone with Glass experience tell if this is a thermal break or a self-inflicted break? I'm about 90% sure its a dual pane window but I can't tell in the pictures. Thoughts? Thanks in advance.

@Shawn Mcenteer You are considered the IRA Holder and therefore have total control over the decisions, strategies, etc. You aren't allowed to have personal use of the investments but you do not have to utilize a property manager. Think of the IRA as an entity, like an LLC or partnership. The IRA goes out and conducts business in its own name, for example, Custodian Name FBO Client Name IRA. This it the titling that you would place on contracts, leases, etc. Following the purchase of an investment, cash flow enters and leaves the IRA directly via your provider. Some IRA providers have better online technology to make these requests easier than others. Alternatively, you can also use an LLC for direct control but this approach is a double-edged sword when it comes to both rules and complexities. Check out my BP Blog for some additional reads.   

Hi @Michelle Martin 

Welcome to BP! Self-Directed IRA investing has been covered in detail here on the board. Your IRA can invest in real estate and your existing $25k can be used as a down payment. In fact, you might even be able to combine your 401(k) and IRA funds together in one IRA to give you more options. If youre 401(k) is still with your current employer, you'd need to write your plan administrator or HR department and find out if your plan allows "in-service distributions". This is essentially the option to move funds to a new plan without ceasing your participation in the existing plan.

Feel free to ask any specific questions you have. I'm also going to send you a colleague request. Cheers!

Hi @Michael Hurdle 

Regardless of whether or not its a cash purchase or a financed deal, if the IRA is the owner of the property, all income and expenses must pass-through the IRA. For example, all rents or sale proceeds would flow back to the IRA. You would then have the choice to take distributions from the account.

Cory Land You, an IRA can lend money to an LLC for a fix and flip. However, the general rule is that if you stand to benefit personally as a result of the transaction, the investment is deemed prohibited. If you are merely a silent investor, you may have options. I've worked with many people in this exact scenario and it boils down to doing things different than you do now if you wish to involve your IRA. Do you mind sharing more details? How many people are involved? Do they have any relation to you? Who manages? What is your role? How do you structure your deals? All these questions will clarify where your IRA has options for involvement.

@Timothy Riley 

I would suggest focusing on the big picture of holding real estate in an IRA before you go looking to understand the complexities of investing IRA funds through an LLC.

While I can't give you advice, I'd like to paint a quick mental picture and let you make sense of it. For starters, picture your IRA as a separate person other than yourself. Your "IRA" money has already been set aside in an account and withdrawing the funds at this point would mean a taxable event and possibily early withdrawal penalties (10% extra). Since withdrawing the money is typically not very ideal, the alternative is the use the structure that you already have put in place. Consider the tax-advantages associated with your specific account type when choosing which deals work well in an IRA. The next big question becomes, what would you like to invest in and feel confident about?

Look into leveraging the IRA and using that ordinary deductions to offset UBIT. Many people frown at UBIT and holding real estate in an IRA with leverage but crunch the numbers for yourself and see what makes the most sense. Check out my recent BP blog on common UBIT questions/answers.

Best of luck to you Tim!

I second what @Brian Eastman sayings about apples and oranges and in-kind distributions. 

@Carolyn Lorence 

I can't be of much help with your capital gains issue - sorry. 

If what you say it true about your current position, adding to it with your IRA shouldn't be a problem. I'm happy to providing clarifying facts if you'd like to message me. The important thing to remember and I believe this was brought up earlier, is that the IRA is its own legal entity and carries specific titling in the name of your provider.

Thanks for your consideration Carolyn. I look forward to speaking at some point. 

Cheers