Your IRA can partner with other funding sources to increase your investment potential

An IRA is considered a separate entity that can conduct business with others. This is a common strategy used in real estate investments. The process is fairly simple, but be sure to adhere to IRA regulations to avoid engaging in any prohibited transactions.

How to Partner with Others to Purchase Real Estate using Your SDIRA

Identify the partner you would like to invest with. Perform your due diligence and confirm that the investment is for you. Combine your self-directed IRA fund with your partner’s funds to purchase the property. Your IRA will own a percentage of the property and must be stated on the title when the transaction is recorded. All income and expenses (on a proportionate basis) from the property flow in and out of your IRA and not your personal finances. If the property is sold, your IRA receives the portion of the proceeds proportionate to the percentage of funds used to the purchase.

A self-directed IRA can partner with anyone at the time of initial purchase, but after the transaction is complete, the IRA cannot conduct any business with a disqualified person. Doing this could lead to significant tax penalties.

The following people are considered disqualified persons:

You and your spouse.

Your lineal ascendants and descendants, and their spouses.

Any person providing plan-related services (custodians, advisors, fiduciaries, administrators).

Any entity (business, corporation, partnership) of which you own at least 50 percent, whether directly or indirectly.