If you are investing real estate in a self-directed IRA it is essential that you understand all of the rules that are involved with this particular type of gold investments. The more that you understand about the investment, the more money that you can make in your IRA, which means more money available to you once you have retired.
Take a look at a few rules that apply to those who want to invest in real estate in a self-directed IRA. You should take the time to familiarize yourself with them all so that your real estate gold investment can go as smoothly as possible.
First of all, you cannot purchase property that you own, or property that is owned by what the IRS has labeled a disqualified person. This forbids any type of self-dealing with the IRA and the real estate. You cannot purchase property from anyone that is in your family, whether it is a spouse, a child or a cousin or uncle.
Another rule involved with the real estate IRA is that you cannot gain indirect benefits with the IRA when you have invested in real estate and a self-directed IRA. The Self-directed IRA is used to provide you with money for retirement, not to benefit with at the current time. The home that you use in the IRA cannot be a home that you plan to live in, vacation in or allow family to live in.
Another rule that you must know is that you cannot purchase an IRA real estate without funding from the self-directed IRA. If there is not enough money already in the account, you can use the money that you have from the self-directed IRA to obtain the rest of the funding. This means that you could have someone else help you pay for the property if need be. The Self-Directed IRA should be titled with a unique title. This is very important.
Under the rules of the self-directed IRA all of the expenses relating to the property under the IRA must be paid for through the IRA. This includes all of the improvements that you choose to make, repairs, maintenance issues, property taxes and more. Additionally the real estate IRA income must go back into the IRA. The money that you make and put back into the IRA cannot be touched until the retirement day, however, the money is tax-free which is a great advantage.