Think-Realty-Magazine-June-2020

FUNDAMENTALS

SELF-DIRECTED

Real Estate and Your IRA WHERE DO YOU WANT TO HOUSE YOUR REAL ESTATE?

byW. J. Mencarow

W

ho owns your real estate? Ask new investors that

• All forms of income-producing real estate • Notes secured by real estate or other collateral • Real estate investment trusts (REITs) • Limited liability companies (LLCs) • Closely held C-corporations • Co-ownership or fractional ownership of real estate-related assets such as Tenants-In- Common investment properties (“TICs”) or Delaware Statutory Trusts (“DSTs”) • Accounts receivable (factoring invoices) • Gold and silver bullion • Foreign and crypto currencies • Hedge funds

• Oil & gas funds

question, and they might reply, “I do, of course.” Experienced investors might say, “my limited liability company owns it.” More sophisticated investors might say, “my limited liability company owns it inside my Roth SDIRA.” We all want to be a more sophisticated investor, so let’s see if that strategy might be a good fit for you. Most people’s IRAs are with a bank or stockbroker, and the investments are limited to what it sells. According to Tom Schmidt of Mainstar Trust, when you have a self-directed IRA (SDIRA), you can choose from some 35 other asset classes, including but not limited to:

INVESTMENTS NOT PERMITTED IN A SDIRA (OR ANY IRA) INCLUDE: • Real estate, including vacation homes you, your spouse, parents or children own. The SDIRA cannot buy it from you or them. • Leased space in your SDIRA- owned property. (In other words, you cannot have any personal interest in or benefit from any real estate owned by your IRA.) • Tangible personal property such as jewelry and collectibles

(antiques, art, coins, etc.) • Life insurance contracts

62 | think realty magazine :: june 2020

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