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Who is the best person to talk to regarding setting up a self-directed IRA? Maybe a tax attorney? DH wants to set one up to buy rental property. Reading the rules online is very confusing. It looks like he needs to either 1) set up a new LLC and make the SDIRA the only member, or 2) add the SDIRA as a member to his existing LLC. Either way, it looks like someone else has to be the administrator, or maybe I am not using the correct term. Also, does the SDIRA get all the profit from the rentals, or can it be split 50% between the SDIRA and the existing LLC? I think I need more help than I can get on a forum! Thanks in advance.
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Who is the best person to talk to regarding setting up a self-directed IRA? Maybe a tax attorney? DH wants to set one up to buy rental property.

I'd do a search on "IRA real estate" to locate people who specialize in this. Be sure to check references.

Phil
Rule Your Retirement Home Fool
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It looks like he needs to either 1) set up a new LLC and make the SDIRA the only member, or 2) add the SDIRA as a member to his existing LLC.

If he sets it up as part of his existing LLC, he runs the risk of committing self-dealing infractions, which would invalidate the IRA, resulting in expensive tax and penalty consequences.

Either way, it looks like someone else has to be the administrator, or maybe I am not using the correct term.

Yes, a 3rd party administrator is required.

Also, does the SDIRA get all the profit from the rentals, or can it be split 50% between the SDIRA and the existing LLC?

All income from the property must remain in the IRA, or it is considered a withdrawal, with associated taxes and penalties. All expenses (initial purchase, property taxes, insurance premiums and deductibles, repairs, maintainence, any utilities not paid by the tenant, HOA fees, special assessments, etc.) for the property must be funded from only the IRA.

Because IRAs are not allowed to take out loans with recourse, it is unlikely that he will be able to use a loan to purchase property - the IRA would need to fund the entire purchase price.

AJ
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Because IRAs are not allowed to take out loans with recourse, it is unlikely that he will be able to use a loan to purchase property ...

And should you find a non-recourse loan, that would make your IRA an owner of debt-financed property, which subjects all of the profits from real estate to the Unrelated Business Income Tax. And those profits would likely include any gain on the sale of the property.

--Peter
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Thanks everyone. He is now looking into a Solo 401(k). I am going to look up someone today to talk with.
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