Purchasing An Investment FAQ
Invest in Real Estate
INVEST IN REAL ESTATE
How do I purchase real estate with my Self-Directed IRA?
Once you have identified a real estate property you would like to purchase with your Vantage Self-Directed IRA, you will need to submit a completed and executed Buy Direction Letter – Real Estate to Vantage. A Vantage IRA Specialist will then provide you with a list of additional documents that will need to be received in good order to process the purchase transaction. Most, if not all, of the supporting documentation will be provided by the title company selected to close escrow on the purchase. Vantage clients should title the purchase contract and all other supporting escrow instructions as follows: Vantage FBO (Client’s Name) IRA.
What are the fees associated with purchasing real estate with my Self-Directed IRA?
There is a $125 transaction fee to purchase real estate within your Self-Directed IRA regardless of the asset purchase value. A detailed overview of all account fees can be found in the Fee Schedule.
I have a property I am interested in purchasing. How long will it take to complete the process?
Once Vantage has received the Buy Direction Letter and all supporting title documents in good order, your purchase request will be completed within 2 business days. You can expect to receive an email confirmation once your request has been processed.
I’ve been told that buying and selling real estate in my self-directed retirement plan was not permissible. Why?
Neither the IRS nor the Department of Labor has ever published a list of legal investments. However, there is a list of Prohibited Transactions and Disqualified Persons that deal with what is not permitted. Real estate and numerous other alternative asset investments are permitted provided you follow the rules.
Can my Self-Directed IRA purchase real estate I personally own?
No, this type of transaction would be considered self-dealing and is strictly prohibited. The Internal Revenue Code Section 4975 provides a list of “disqualified parties” and “related parties” to your Self-Directed IRA, and account holders are considered related to their own Self-Directed IRA.
What are my options if there isn’t enough cash in my Self-Directed IRA to make my real estate investment?
There are three options:
Add additional funds to your Self-Directed IRA via transfer, rollover, or contribution.
Partner with others, either directly or through an entity (LLC, LP, etc.)
Obtain a non-recourse loan
What is a non-recourse loan?
A non-recourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable.
How do I obtain a non-recourse loan?
Private lenders and some financial institutions offer this type of product. Typically, traditional banks do not offer Self-Directed IRA loans. Contact us for our Resource List for a list of non-recourse lenders.
Can I move a real estate asset held within my Vantage IRA to a newly formed IRA LLC?
Yes, once the IRA LLC documents are in good order, you can direct Vantage to assign the real estate asset into the IRA LLC. The real estate asset must be re-registered with a Quit Claim Deed.
How should the ownership of my real estate purchase documents be titled?
Any real estate purchase made within your Vantage Self-Directed IRA should be titled as follows:
Vantage FBO (client name) IRA.
My spouse and I are Vantage clients. Can we use one Buy Direction Letter to buy a property?
No, Vantage must receive direction from each Self-Directed IRA holder in proportion to the percentage of ownership.
If I choose not to use a title agency, what is the procedure?
Using a title company is not required, however highly encouraged. If one is not used, Vantage will request a Hold Harmless Agreement, the original Warranty Deed / Quit Claim Deed, the purchase contract, and a Payment Authorization Letter for any applicable fees.
How do I pay a real estate expense from my Self-Directed IRA?
Expenses can be paid, in proportion to the percentage of ownership, from your IRA by submitting a Payment Authorization Letter and invoice to our office. You can send us the documentation electronically, by fax, or by mail.
What are the payment options for my tenants to make their rent payments?
Payments can be made via check, ACH or wire. The property address should be noted on the incoming check or notated when sent electronically. Please call our office at 866-459-4580 for electronic ACH and wiring instructions.
Am I required to submit a Payment Authorization Letter for every expense relating to my property?
You can select “Master” on a Payment Authorization Letter to authorize recurring expenses such as property taxes, HOA fees, utilities, and insurance as the invoices arrive.
If I run out of money in my Self-Directed IRA to pay expenses on my real estate investment, what happens? How do I pay the expenses?
You can add funds to your Self-Directed IRA via transfer, rollover, or contribution.
If the Self-Directed IRA only owns a percentage of the property and the remaining percentage is owned personally, can I use the property some of the time during the year?
No, this would be considered a prohibited transaction. If the Self-Directed IRA owns any percentage of the property, it cannot be used by any disqualified persons/related parties of the Self-Directed IRA.
INVEST IN A PRIVATE COMPANY
What is the process for my Self-Directed IRA to invest in a private company?
Once you have identified a private company you would like to invest in with your Vantage Self-Directed IRA, you will need to submit a completed and executed Buy Direction Letter – Private Company along with the copy of the companies Operating Agreement or Subscription Agreement to Vantage. Vantage clients should ensure that all entity documents outlining the Self-Directed IRA investor are vested as follows: Vantage FBO (Client’s Name) IRA.
What are the fees associated with investing in a private company?
There is a $125 transaction fee to purchase private company shares/units within your Self-Directed IRA regardless of the value of the asset purchase. A detailed overview of all account fees can be found in the Fee Schedule.
How long will it take to complete the purchase of a private company investment?
Once Vantage has received the Buy Direction Letter – Private Company and all supporting subscription documents in good order, your purchase request will be completed within 2 business days. You can expect to receive an email confirmation once your request has been processed.
How should the ownership of the private company documentation be titled and addressed?
The ownership of your Self-Directed IRA purchase into a private company should be titled and dated as follows:
Vantage FBO (client name) IRA
20860 North Tatum Blvd. #240
Phoenix, Arizona 85050
Should professional service expenses be paid out of my Self-Directed IRA (i.e., legal, accounting, tax, document preparation, etc.)?
Yes, any professional service fees incurred to establish and maintain the structure or alternative asset held in your Self-Directed IRA should be paid from your IRA balance. Paying for a professional’s service fees with personal funds outside of your Self-Directed IRA could be viewed as a prohibited transaction.
Can my Self-Directed IRA invest in a business I currently own and/or control?
No, this would be considered self-dealing (disqualified persons/related parties) and a prohibited transaction.
If my Self-Directed IRA invests in a private company (i.e., LLC, LP, etc.), is an annual fair market valuation required?
Yes, a fair market valuation of the units/shares of the company, along with substantiation, must be provided to Vantage annually to comply with the Internal Revenue Service reporting requirements.
INVEST VIA AN IRA LLC (AKA “CHECKBOOK CONTROL” IRA)?
What is the process to purchase an IRA LLC?
Once you have established a Vantage Self-Directed IRA and created a new single-member LLC in which your Self-Directed IRA is defined as the 100% sole member, you will need to submit a completed Buy Direction Letter along with the copy of the Operating Agreement or Subscription Agreement to Vantage. It is highly encouraged to seek the help of a legal professional to implement the IRA LLC entity as they are a unique structure that should not be treated the same as a non-IRA LLC setup.
What are the fees associated with creating the IRA LLC structure for my Self-Directed IRA?
There is a $125 transaction fee to purchase IRA LLC shares/units within your Self-Directed IRA regardless of the value of the asset purchase. A detailed overview of all account fees can be found in the Fee Schedule.
Can my Self-Directed IRA partner with others utilizing an LLC structure? Does the partnership need to be 50%/50% split?
Yes, your Self-Directed IRA can co-invest with other investors under an LLC structure as long as it does not create a Prohibited Transaction under IRC Section 4975. The partnership does not have to be a 50%/50% split. Percentages of ownership can be defined by the partners based on the amount of money being invested by each partner.
Does Vantage create the operating agreement and/or subscription agreement?
No, Vantage does not offer this service. Contact us for our Resource List for a list of legal professionals.
How should the ownership of my Self-Directed IRA be titled within the LLC documentation?
The ownership of an IRA investment into an LLC should be titled as follows: Vantage FBO (client name) IRA.
Does there need to be a Manager assigned on the Operating Agreement of my IRA LLC?
Yes, there must be a manager designated within the LLC Operating Agreement. The IRA LLC must be “Manager Managed” and not “Member Managed.”
Am I required to hire a legal professional to create my IRA LLC, or can I do it myself?
Neither Vantage nor the U.S. Government requires a legal professional to be used to create your IRA LLC, but it is highly encouraged. The language within the IRA LLC Operating Agreement is unique and should outline specific terms involving the IRA’s interest in the LLC.
Does Vantage provide me a bank account so I can write checks out of my IRA LLC?
No, Vantage does not provide you with your IRA LLC’s business checking account. Once the IRA LLC is established in good order, the IRA LLC’s Manager should select a bank of their choice and establish the IRA LLC’s business checking account.
As I contribute more funds to my Self-Directed IRA annually (i.e., transfer, rollover, contributions), how do I add those funds to my IRA LLC?
Complete and submit another Buy Direction Letter – Private Company to our office. This form can be downloaded, printed and submitted, or completed online with an e-signature.
How should dividend distributions from a private company be titled when being returned back into my Self-Directed IRA?
All dividend distribution checks coming back into your Self-Directed IRA should be titled as follows: Vantage FBO (client name) IRA.
Can I take an income distribution directly from my IRA LLC checking account?
No, you must issue a check from the LLC checking account for deposit into your Vantage IRA and submit a Distribution form so the distribution can be properly reported to the IRS through Form 1099R.
Do I have to file taxes on my checkbook IRA LLC?
You are not required if you have a single-member LLC. If your LLC has multiple members, you should consult with a tax professional to determine the correct steps to be taken to files taxes.
INVEST IN PRIVATE LENDING
What documentation must I submit to lend money from my Self-Directed IRA to a third party?
Once you have identified the third party you would like your Self-Directed IRA to lend to, you will need to submit a completed and executed Buy Direction Letter – Secured or Unsecured Note to us. A Vantage Self-Directed IRA Specialist will then provide you with a list of additional documents that will need to be received in good order to process the private loan transaction. Vantage clients should title the lender on the note and all other supporting documents as follows: Vantage FBO (Client’s Name) IRA.
What fees are associated with lending money from my Self-Directed IRA?
There is a $125 transaction fee to lend your funds from your Self-Directed IRA regardless of the value of the note. A detailed overview of all account fees can be found in the Fee Schedule.
How long will it take to complete a private lending transaction from my Self-Directed IRA?
Once Vantage has received the Buy Direction Letter – Secured or Unsecured Note and all supporting loan documents in good order, your purchase request will be completed within 2 business days. You can expect to receive an email confirmation once your request has been processed.
What documents must be submitted for my Self-Directed IRA to purchase a note secured by a Deed of Trust?
Vantage will need the original promissory note and Deed of Trust. In the case where you are using a loan service, Vantage will only need a copy of the promissory note and Deed of Trust.
Can my Self-Directed IRA funds be used to lend money to me personally?
No, this would be considered a “self-dealing” prohibited transaction. The Internal Revenue Code Section 4975 provides a list of “disqualified parties” and “related parties” to your Self-Directed IRA, and unfortunately, account holders are considered related to their own Self-Directed IRA.
Does Vantage need the original Unsecured Promissory Note?
Yes, we require the original note signed by the client and the borrower.
How should the ownership of my Self-Directed IRA be titled on the promissory note?
All language within the promissory note documentation that references the “lender” should be vested in the name of the Self-Directed IRA as follows: Vantage FBO (client name) IRA
How should I instruct the borrower to make payments to the promissory note?
All payments being made by the borrower of the note to the Self-Directed IRA should be made payable and addressed as follows:
Vantage FBO (client name) IRA
20860 North Tatum Blvd. #240
Phoenix, Arizona 85050
Should you desire to have the borrower make payments into your Self-Directed IRA via an ACH or wire, please contact us, and we can provide you with instructions on how to set that up for your Self-Directed IRA.
Does Vantage contact the borrower to collect my Self-Directed IRA note payments? Will Vantage notify me if payment is not received from the borrower?
No, Vantage is not a Servicing Agent and, as such, is not responsible for ensuring timely payments are being made on the notes held within the Self-Directed IRA.
If I hold notes in my Self-Directed IRA, am I still required to complete the annual Fair Market Valuation?
Fair Market Valuations are not required for Unsecured Notes or Deeds of Trust unless you are reporting a pay down or in a year of Required Minimum Distribution (RMD).
INVEST IN PRECIOUS METALS
What is the process to purchase metals with my Self-Directed IRA?
Once you have identified a precious metals broker you would like to work with, you will need to submit a completed and executed Buy Direction Letter – Precious Metals. A Vantage IRA Specialist will work with your broker to purchase your selected metals in the name of your Self-Directed IRA.
What fees are associated with purchasing precious metals??
There is a $75 transaction fee to purchase precious metals within your Self-Directed IRA. Shipping fees will also be charged based on weight and metal type, a minimum of $50. A detailed overview of all account fees can be found in the Fee Schedule.
How long will it take to complete a precious metals transaction?
Once Vantage has received the Buy Direction Letter – Precious Metals in good order, your purchase request will be completed within 2 business days. You can expect to receive an email confirmation once your request has been processed.
What precious metals are permissible to purchase within my Self-Directed IRA?
Only precious metals which meet the requirements of IRC 408(m)(3) may be held by your Self-Directed IRA. Please contact your precious metals broker for a complete list.
Are my precious metals insured while stored at the depository?
Yes, up to $1 million dollars.
Why has the value of my coins gone down when the value of gold/silver is going up?
Since Vantage is not a brokerage firm or investment company, we report the market values obtained from the third-party precious metals brokerage company on a monthly basis. Please contact your precious metals broker for any questions pertaining to the market value of your metals.
May I visit the depository where my metals are being held?
Please contact your depository directly to determine whether you can obtain access.
Am I able to personally have possession (custody) of the precious metals owned within my Self-Directed IRA?
No, all precious metals need to be in the custody of a third-party depository.
How are Required Minimum Distributions (RMDs) handled for precious metals accounts?
You can complete and submit a Sell Direction Letter – Precious Metals along with a Distribution Form, at which time you can elect to take cash or in-kind distribution.
INVEST IN FOREIGN CURRENCY
What is the process to invest in foreign currency (i.e., FOREX) with my Self-Directed IRA?
Once you have identified a foreign currency provider you would like to work with, you will need to submit a completed and executed Buy Direction Letter – Private Company along with the purchase details of your currency selection.
What fees are associated with investing in foreign currency?
There is a $125 transaction fee to purchase foreign currency within your Self-Directed IRA regardless of the value of the currency purchased. A detailed overview of all account fees can be found in the Fee Schedule.
How long will it take to complete a foreign currency transaction?
Once Vantage has received the Buy Direction Letter – Foreign Currency in good order, your purchase request will be completed within 2 business days. You can expect to receive an email confirmation once your request has been processed.