or even both...
that is no reason to be intimdated at all! It's not only easy to work with a IRA custodian, but it's also easy to find one as well! Choosing the right IRA real estate custodian is an important decision.
When an IRA custodian allows real estate transactions, you have the ability to grow your retirement wealth faster than ever! If you are new to this type of investing, you should know that there are some things that an IRA real estate custodian can do, and, of course, there are certain things that he or she cannot do.
Likewise there are certain kinds of investments that you can make and others that are prohibited.
Here, you will find information about all of these things.
First, let's start with what your trustee or custodian is responsible for.
When an IRA custodian allows real estate transactions, he or she is responsible for all of the usual things that an account manager does, such as filing appropriate tax documents, but he also holds all deeds in his name.
The title for the deed will read like this, "Joe iLOC (Your IRA real estate custodian) Company's name FBO (for the benefit of) John Smith's IRA.
The reason being is because you and your retirement account are two separate legal entities.
That's an important thing to remember, because it applies to the prohibited transactions, so I'll come back to it.
When an IRA custodian allows real estate deals, he cannot give you advice about what to buy or when to sell.
He is a "passive" account manager, simply doing as directed by you, the account owner.
An IRA real estate custodian cannot give you legal or tax advice, other than information about prohibited transactions and the like.
So, you may still need an attorney, an estate planner, an accountant, etc.
If an IRA custodian allows real estate deals, he should be aware of the following prohibited transactions.
If you conduct deals like these within the account, you could lose your tax deferred status and pay heavily in taxes for that year, particularly if you made a profit.
A qualified retirement account cannot be used to purchase property owned by you or a disqualified person.
For example, an IRA real estate custodian cannot allow the account to be used to buy the house that you currently live in.
The "disqualified" people are you, your spouse, your children, their spouses, your parents, your grandparents, your grandchildren and your IRA real estate custodian.
So, if an IRA custodian allows real estate transactions, he must refrain from offering up a "good deal", because it could be considered "self-dealing" and that's against the law.
So, if your trustee can't help you find good deals, who do you turn to? Well, it is expected that you have the knowledge, time and experience to find the right property at the right price, but I'm sure some of you do not.
So, it's good to know that there are some experienced investors that can help you find the right kind of deals for your retirement account.
They are willing to "take you by the hand" so to speak and show you the way.
Your IRA real estate custodian will help you in lots of ways, but you are primarily responsible for the health and wealth of your retirement fund.