With a checkbook control self directed real estate IRA LLC you as manager of the LLC will never have to seek the consent of an IRA custodian to make an investment or be subject to excessive custodian account fees based on account value and per transaction. Making a real estate IRA investment is as simple as writing a check.
The IRS has always permitted an IRA to purchase or hold real estate or raw land. Making a real estate investment is as simple as writing a check with a self directed IRA real estate solution. Since you are the manager of your Self-Directed IRA LLC, you have the authority to make investment decisions on behalf of your IRA. One major advantage of purchasing real estate with a Self-Directed IRA real estate solution is that all gains are tax-deferred until a distribution is taken (Traditional IRA distributions are not required until the IRA owner turns 70 1/2). In the case of a Self-Directed Roth IRA LLC, all gains are tax-free.
For example, if you purchased a rental property with your Self-Directed IRA real estate solution for $75,000 and later sold the property for $150,000, the $75,000 of gain would generally be tax-free. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income taxes and in most cases state income tax.
By using a checkbook control self directed IRA real estate solution, you will be able to make real estate investments tax-free and without custodian consent. To make an investment, simply write a check and use the funds straight from your Self Directed IRA real estate LLC bank account.
For example, Joe has established a Self Directed IRA real estate LLC structure with IRA Financial Group. Joe’s Traditional IRA care of the custodian is the sole member of the LLC and Joe will be appointed as manager of the LLC as per the LLC Operating Agreement. Joe has opened her Self Directed IRA real estate LLC bank account at a local bank. The name of Joe’s Self-Directed IRA LLC is ABC LLC. Joe wishes to use her IRA funds to purchase a home from Steve, an unrelated third-party (non-disqualified person). Steve is anxious to close the transaction as soon as possible. With a “checkbook control” Self Directed IRA LLC, Joe, as manager of the LLC, can simply write a check using the funds from the ABC LLC bank account or can wire the funds directly from the account to Steve. Joe, as manager of the LLC, no longer needs to seek the consent of the custodian before making the real estate purchase. With a regular Self Directed IRA without “checkbook control”, Joe would likely not be able to make the real estate purchase since seeking custodian approval would have likely taken too much time.