© copyright mark j. kohler, cpa, jd, p.c. 2006 qualified money and real estate option 1 ira $$...
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© Copyright Mark J. Kohler, CPA, JD, P.C. 2006www.kkolawyers.com
Qualified Money and Real Estate
Option 1
IRA$$
SDIRA$$
Raw Land
- No Debt- No LLC/LP- No Partners- Direct Investment in name of IRA
Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?
© Copyright Mark J. Kohler, CPA, JD, P.C. 2006www.kkolawyers.com
Qualified Money and Real Estate
Option 2
IRA$$
SDIRA$$
Rental Property(Income Producing)
Non-RecourseLoan
MortgageCompany
- Non-Recourse Debt- No Personal Guaranty- No Sweat Equity- No LLC/LP- No Partners- Direct Investment in name of IRA
Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?
© Copyright Mark J. Kohler, CPA, JD, P.C. 2006www.kkolawyers.com
Qualified Money and Real Estate
Option 3
IRA$$
SDIRA$$
Rental Property(Income Producing)
Non-RecourseLoan
MortgageCompany
- Non-Recourse Debt- Single Member LLC- UDFI tax- No Personal Guaranty- No Sweat Equity- No Partners- Direct Investment in name of IRA
SingleMember
LLC
Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?
© Copyright Mark J. Kohler, CPA, JD, P.C. 2006www.kkolawyers.com
Qualified Money and Real Estate
Option 4
IRA$$ SDIRA
$$50%
Limited Liability Co.
orLimited Php.
IRAOwner
40-45%
MortgageCompany
Guarantor
Rental Properties
3rd PartyOwner
5-10%- Recourse Debt - YES- Partners -YES- LLC/LP- Yes
Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?
© Copyright Mark J. Kohler, CPA, JD, P.C. 2006www.kkolawyers.com
Qualified Money and Real Estate
Option 5
Self Directed401K or Defined
Benefit Plan
50%
LimitedLiabilityCompany
MortgageRental Properties
Bs. Entity
- Defer up to $44,000in 2006 in 401K
- Contributions vary forDB Plan
IRAOwner
40-45%
Guarantor
3rd PartyOwner
5-10%
Limited Liability Co.
orLimited Php.
Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?
© Copyright Mark J. Kohler, CPA, JD, P.C. 2006www.kkolawyers.com
Self-Directed Plan Compliance Issues
• Must be Real Estate Operating Company if the Retirement Plan and IRA Owner own more than 25% of the LLC/LP See 29 CFR Section 2510.3-101
• Can’t have 100% control of LLC/LP
• Prohibited Transactions Transactions with Prohibited parties Use of Property Compensation of IRA owner
• Administration duties Annual report/valuation to Custodian Bookkeeping and tax return
BEWARE!!This is not a comprehensivelist, and also requiresa properly drafted Company document!!
Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?
© Copyright Mark J. Kohler, CPA, JD, P.C. 2006www.kkolawyers.com
UBTI and UDFI
• Unrelated Business Taxable Income (“UBTI”)•Exemptions for rental income, interest income, gains from sale of property other than property held for sale in the ordinary course of business.
• Unrelated Debt Financed Income (“UDFI”)
• Two Tier Analysis
• Real Estate Professional / Dealer Status
• Debt is the key calculation
• Trust Tax rates
• 990 Tax Return for IRAs, 5500 for 401ks
** This is only a survey of points to consider, these rules must be studied and implemented with care.
Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?