International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Checkbook IRA is the Best Way to Hold Real Estate
Raj Kiani, Ph.D., EA

A Checkbook IRA is a power tool for building wealth, but by knowing the facts that by growing your future funds through investment can be confusing and even scary. The Checkbook IRA empowers you to take control of your retirement funds and unlock a world of investment opportunities by building retirement wealth through traditional and alternative asset investments, such as real estate. A Checkbook IRA [ also known as the self-directed IRA LLC (Limited Liability Company) or IRA LLC] is a cost effective and time efficient investment vehicle available to selfdirect IRA investors. In short, the Checkbook IRA will help you: (1) Take control of your future, (2) invest in what you know, i.e. {buy investment properties such foreclosures, multi-families, and undeveloped lands}, and (3) eliminate excessive custodian fees. Since the early 2000s, the number of self-directed IRA LLC “Checkbook Control” has more than doubled! These plans give individuals the ability to invest into assets that they understand and can control such as real estate. Investors who have knowledge and expertise in a particular investment can purchase them in a tax-free or taxdeferred environment. Self-directed IRA LLC “checkbook control” are qualified retirement plans in which the account holder is the sole investment decision maker. According to IRS regulations, a qualified custodian ( bank, or trust company) holds the assets of an IRA on behalf of the account holder. The IRA custodian maintains the assets and all transaction records of the account, files required IRS reports, and perform other administrative duties on behalf of the account holders. The purpose of this paper is to explain (a) why the IRA should be invested in real estate, (b) the steps involved in in establishing a sound Self-Directed IRA LLC with Checkbook IRA, (c) the restrictions (prohibited transaction) in a real estate IRA and the tax and penalty consequences of incorrect investment in a real estate IRA.

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