When you make an investment and receive a return, you’re able to enjoy interest on both the investment principle and the earnings you’ve accumulated. The additional interest you make on your profits is called compound interest. Compounding can occur with any investment you make, but the “true” power of compounding interest is obtained when you… Read More
Q: Can I get a rehab loan to pay for the repairs?
A: Your IRA can take on debt to finance an investment in the form of a non-recourse loan. The IRS doesn’t allow the IRA to be used as a security for the loan and you can’t personally guarantee the loan. The only collateral for the loan is the property itself. (Source: ETC Rehab RE QS)… Read More
Q: May I use funds from my self-directed IRA to renovate property and sell it at a higher price?
A: Yes, you can use funds from your self-directed IRA to renovate property and sell it at a higher price. However, your IRA must pay all expenses associated with a property that it owns, including the renovation of the property. Furthermore, all proceeds associated with the sale of your IRA’s investment in a renovated property… Read More
Q: What if I don’t have sufficient funds in my self-directed IRA to purchase the property?
A: Generally, you have two options if you can’t purchase a property outright with your self-directed IRA: • First, you can use debt-financing in the form of a non-recourse loan, which means if your IRA fails to make payments, the lending institution can only come after the property, not the IRA. Please note: With debt… Read More
Q: I plan on purchasing a property with my self-directed IRA that will generate rental income. What happens with the rental income and what happens when I sell the property?
A: All income generated by a property or the sale of a property owned by your IRA must return to your IRA to retain the tax-deferred or tax-free status of the investment. Rental payments are sent to Equity Trust Company for the benefit of your IRA. The checks or money orders are titled, “Equity Trust… Read More
Q: Can my self-directed IRA purchase real estate?
A: Yes, your self-directed IRA can purchase real estate. One of the main advantages of a real estate IRA is that you can apply your knowledge and invest in assets like raw land, single family homes, apartments and much more. However, please be aware of the following limitations that are considered prohibited transactions: • You… Read More
Investing in Real Estate with Your SDIRA
After completing a successful real estate transaction, do you dread writing the check that must go to the IRS for taxes? Do you ever wonder how many more properties you could buy if your profits weren’t split with the government because of taxes? Do you ever turn down profitable deals just because you don’t have… Read More
