The Self-Directed IRA owner and disqualified family members must not benefit, live, or vacation at the property. All expenses and revenue must flow to and from the IRA.
- Your retirement account is not allowed to purchase real estate you already own. The IRA and IRA funds must be listed as the buyer, not personal dollars.
- You and other disqualified people may not use the property (see disqualified person list here).
- You and other disqualified people may not perform any property repairs or improvements. Personally, a third party must be hired to do any repairs to the property. You can still oversee and monitor workers hired by your IRA, do paperwork, managerial and office-like duties, but you can't do physical work or get paid any salary or commissions.
- When in doubt, if you can easily remove yourself from the day-to-day business, it’s best to do so and use a trusted, non-disqualified person. Here is a list of acceptable substitutes.
Want to read more?
- Want to invest in an authorized real estate option? Here are the key factors that you should consider before choosing an investment property.
- Was your original intent a prohibited transaction? Why you should still consider investing in real estate.
- An overview of the different types of real estate assets: A Minute With Dan (Video).