By J.P. Dahdah, Founder & CEO of Vantage
It’s a mistake to think that placing your IRA savings in with high profit potential asset will be enough to secure your future.
Your defense strategy is just as important as your offense. When it comes to investing in real estate IRA, the #1 DON’T is “self-dealing.”
Self-dealing is a prohibited transaction that involves buying from or selling to disqualified persons. It is defined under the Internal Revenue Code Section 4975.
Disqualified persons are individuals or entities between whom any real estate IRA interaction is prohibited, whether it be direct or direct sale, exchange or leasing of any property, lending of money or other extension of credit, furnishing goods, services or facilities or transferring to or permitting the use of IRA income or assets. There are noted exceptions to this rule. If your transaction does not fall under any of the exceptions, then it is prohibited.
Who are these disqualified persons? Generally, there are two categories: (1) the fiduciary, which, in the case of a Self-Directed IRA, includes you as the owner and (2) your family members, such as your spouse, parents, grandparents and great grandparents, children and their spouses and grandchildren, great grandchildren and their spouses.
So, while investing your IRA in real estate can be easy and provide great return potential, be sure to choose an IRA provider who can and will educate you and make sure you adhere to all the regulations. The last thing you want is to suddenly discover your investment breaks the rules!
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or Info@VantageIRAs.com.