Checkbook-Control IRA, QRP & 401k Real Estate

Self-directed retirement accounts – Checkbook IRAs, Checkbook 401k plans, Checkbook QRPs, Checkbook HSAs, and Checkbook DB Plans – can make direct real estate investments in any type of property, including: single-family and multi-family residential, commercial, industrial, office-space, retail, and mixed-use.

If you’d like to set-up a Real Estate IRA, Real Estate Solo 401k, Real Estate QRP, Real Estate Defined Benefit Plan, or Real Estate HSA – this page provides tips for doing so compliantly.

What is Self-Directed Real Estate Investing?

Checkbook IRA-LLCs and Solo 401k Plans can be used to invest in the ultimate “hard asset,” real estate. Many Americans have used real estate to grow wealth that has withstood the test of time and rocky financial markets.

There are a myriad of ways to approach the real-estate industry and all of those are accessible to your Real Estate IRA-LLC, Real Estate QRP,  or Real Estate Solo 401k.

Self-Directed Retirement Accounts can invest in every type of real estate asset, including:

  • Homes, apartments and condominiums
  • Commercial properties such as retail stores, hotels and office complexes
  • Trust deed notes, mortgages and tax liens
  • Raw land and lots
  • Real estate options
  • Real estate syndications
  • Real estate private placements
  • Other types of property such as farmland, boat slips, mobile homes and timber rights

Why Use A Checkbook Control Retirement Account?

  • Build wealth in your self-directed retirement account with rental income, fix-and-flip projects, and profits from the sale of real property.  Use Checkbook Control to close deals before someone else does.
  • Ongoing property management requires the ability to pay service-providers on an ongoing basis – and when the unexpected happens. This is possible only with Checkbook-Control.

Checkbook Retirement Real Estate Compliance

Purchasing and maintaining real estate through a self-directed retirement account differs from traditional property investments in a few important ways:

  • The property’s buyer is the Checkbook Retirement Account. Title and all paperwork are done in the name of the investing entity, which may be your Checkbook IRA-LLC, Solo 401k, Solo 401k-LLC, QRP, or Defined Benefit Plan. Be sure to note the correct authority and capacity of the individual signing documents as Trustee or Manager, as applicable.
  • All expenses and revenue must flow through the Retirement Account. Personal cash cannot be used to pay expenses, and revenue must flow through the retirement account. Maintain adequate liquidity in the retirement account to cover real estate investment expenses.
  • The property cannot be used for personal needs. To avoid IRC 4975 prohibited transactions the property must be treated as investment only, not for the immediate benefit of you, your business, or other disqualified persons.
  • Rehab work, maintenance and repairs should be done by a third party. If the retirement-account owner contributes value to the property by working on it there could be tax penalties.
  • Financing must be non-recourse to the account-holder. A traditional loan requires a personal guarantee from the borrower. Personally guaranteeing a loan extended to your IRA is a prohibited transaction. Non-recourse financing is available from some lenders.
  • Nonrecourse financing may result in UDFI to an IRA-LLC. If your IRA obtains a non-recourse loan to finance the real estate investment of your Checkbook IRA, a portion of the real-estate income generated may be taxable as Unrelated Debt Financed Income (UDFI). Checkbook Solo 401k, Defined Benefit Plans, and all other QRPs benefit from a UDFI exclusion for real-estate acquisition indebtedness.
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