What activities may the owner of a real estate IRA perform?
Owning Real Estate in an IRA can be a great way to earn tax-deferred or tax-free money. Many Real Estate IRA accounts grow very large.
When investing in real estate, IRA investors are allowed to do the following:
Investors are always allowed to perform “administrative” IRA investment functions. Examples of administrative activity:
- Select the investment property
- Read and review documents
- Determine the plan; is this for buying and renting?
- Is rehab work necessary? What is the extent and type of the work required?
- Hire the people to perform the labor supervising the project
- Select the tenant
- Collect rent
- Track income and cost
In addition, your IRA can partner with other entities (at the beginning of an investment only). If you, personally, are a partner, benefits must always be “percentage invested = percentage of benefit.” If an IRA invests 42% of the money, for example, your IRA receives 42% of the benefit. Your IRA may partner with another IRA, another individual, or in yourself.