You will also need to take caution to avoid engaging in a prohibited transaction.This BP blog post discusses this type of IRA plan in details: http://www.biggerpockets.com/blogs/2810/blog_posts/28450-real-estate-ira

No matter how you structure this with a self-directed IRA it is a prohibited transaction.

(That seems weird if true).The point is, as far as I know, it is USUAL for apartments to already have separate utility meters, so should ALREADY be separately billed to the Tenants too.The ones that aren't, often have prohibitive costs, if not impossible, to separate (otherwise they would already have been done that way)...I have heard that in SOME cities, the WATER for example may be billed to the Tenants, but in case of non-payment, it would be the OWNER who would be chased!

It is unclear if the man was granted access to the woman's room, but the contract prohibits smoking in the house, regardless.How would you handle the situation?

we believe we can deduct the cost of new carpet from the security deposit because it isn't normal wear and tear because the lease prohibits animals.  

@Marty N.To learn about the prohibited transaction rules, visit the following IRS links:The transaction that you are describing would be in violation of the following specific prohibited transaction:Furnishing of goods, services, or facilities between a plan and a disqualified person.http://www.irs.gov/irm/part4/irm_04-072-011.htmlhttp://www.irs.gov/Retirement-Plans/Retirement-Plan-Investments-FAQs

The costs associated with an Improvement Exchange would be cost prohibitive for $20,000 in improvements. 

Make sure you understand what a prohibited transaction and self dealing is before you use SD IRA funds for real estate investments.

With that said, when selling my flips, my contracts specifically prohibit an assignment by the purchaser...period.

Related-party rules typically prohibit use of property owned by the taxpayer or a related party as the purchased property.A newly-released IRS ruling enables some taxpayers to circumvent the related-party rules, to indirectly use property owned by the taxpayer or a related party to complete a 1031 Exchange.