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Can anyone be kind enough and explain how self-direct IRA for Real Estate works?

- is it a completely different "kind" of IRA where you have to open a sepearate account? or it is just a continuation of the typical IRA?
- do you stil get to choose between a traditional vs roth "self-direct" IRA?
- I understand it must be an investment property but how does it exactly work as in all your down payments and monthly payments have to go through this self-direct IRA account to pay all the lenders, property managers and such?
- how about all the tax write-offs?

thanks! and I am sure I would have follow up questions, so please check back after your response too.... thanks in advance...

Attorney Johnson: First of all, thanks but I got some more questions...

- So it HAS to be a self-directed one? can't buy with my "regular" IRA account?

- To confrim, it must be an investment property right? meaning I can't live in it?

- Technically, a trustee still holds the title (I am in CA), is just the IRA company is "acting" for me. Almost like if I use a coporation to buy it??

- how about monthly payments? I suppose I need to transfer money into the IRA account every month for it to pay the mortgage and likes?

- how about taxes? how does interest payments and depreciation come into play?

- Don't you still need to wait till 65 until you can access the proceeds without penalty? I heard that might be a "loophole" where you don't need to wait that long??

Thanks! u r the 1st that knew anything about this, thanks...

A self-directed IRA is the same as a traditional IRA, only that you buy real estate with it. You find a self directed IRA company (I put a link to the one I use below). Then you transfer your funds to the self-directed IRA. When you are ready to buy real estate, the self directed IRA is the buyer and will hold title in the name of the IRA. The company sends the funds to the closing, and voila, your IRA owns real estate.

If it is a regular IRA, the sales proceeds would be ordinary income. If it is a Roth IRA, the sales proceeds would be tax free.

Yes is has to be with a self directed company.
The property can not be personally used.
The IRA is the owner through the trustee.
The mortgage must be non-recourse.
The regular IRA rules apply.
For more information call a self-directed IRA company
Entrust's number is 866-903-1031 Report It

Yes it the same as a the IRA you are familiar with all of the same rules. The big difference is that nontraditional assets can be included. In fact, you can even get checkbook control of the IRA if structured correctly.

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