Real Estate IRA Allowable Activities

Jul 17, 2018

Real estate activities

What activities may the owner of an 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.

What is the owner of the IRA allowed to do when their IRA invests in Real Estate?

In general, you are always allowed to perform the “administrative” functions. Think of it this way; You are always allowed to manage your IRA investment activity. Examples of administrative activity:

  • Select the investment property
  • Read and review documents
  • Determine the “plan” i.e. is this for buy and rent?
  • Determine if rehab work is needed, the extent and type of work
  • Hire the people to perform the labor Supervising the project
  • Select the tenant
  • Collect rent
  • Track income and cost

In addition, your IRA may partner. The partnership with the IRA must be established at the beginning of the investment. If you, personally, are a partner, benefits must always be “percentage invested = percentage of benefit”. For example, if your IRA invests 42% of the money your IRA receives 42% of the benefit. Your IRA may partner with:

  • Another IRA
  • Another individual
  • You personally