Diversifying your retirement accounts with real estate

Invest in what you understand and reap the rewards. September 2012 Having a specific property in your IRA account is perfectly legal and has been a part of IRA investing since 1974. While buying real estate in your IRA may sound like a great idea, it is, as long as you play by the rules. The IRS publication that deals with the rules for Self Directed IRAs (SDI) says what can and cant be held in an IRA account. I am not going to list them here, but whats allowed is much greater than what is not. Which retirement plans are eligible to be self-directed? Individual IRA and Roth IRA accounts Savings Investment Match Plan for Employees (SIMPLE) Solo 401k Roth Solo 401K Roth 401k Safe Harbor Plan Health Savings Accounts (HSA) Coverdale Education Savings Account IRS rules and restrictions governing Self Directed IRAs Arms length transactions: basically, you, the IRA holder cant directly benefit from an asset owned by your IRA. Since your IRA was designed for future, not current benefit, you cant benefit from the IRA currently. Examples of prohibited uses and transactions are as follows: You cant personally use IRA property (i.e. you cant use property owned by your IRA as a personal residence, vacation home or office). You cant receive personal benefit from your IRA (i.e. you cant lend yourself money or pay yourself for services provided to your IRA). All revenue and expenses must be paid to or deducted from your IRA, not from you outside the IRA Disqualified Individuals This IRS rule stipulates that your self-directed IRA may not buy from, sell to or any other way be involved with any disqualified individual. Disqualified individuals include you (the IRA holder), your ascendants and descendants (the upper and lower branches of your family tree). These are specifically you, your parents, grandparents and great grandparents, your children and their spouses, your grandchildren, great grandchildren and their spouses. !
16458 Bolsa Chica St. #410, Huntington Beach, CA 92649 / office (714) 465-3167 / fax (866) 894-4683 Steve@MahaloWealth.com / MahaloWealth.com
Steve Gibbs, Financial Advisor of Mahalo Advisory Services LLC (MAS), 5152 Robinwood Dr., Huntington Beach, CA 92649 (714) 465-3167. Advisory Services are offered through!MAS,!a!registered!investment!advisor!

! AND Prohibited Transactions Prohibited transactions are any improper use of your IRA account by you, your beneficiary or any disqualified person such as: Borrowing money from the account Selling property to the account Using the account as security for a loan Buying property in the account for personal use

While this is not an exhaustive list for establishing, funding and investing in real estate for your IRA, at least it should give you an idea of whats involved. If you have questions about using this strategy, please feel free to call me at my office, 714-465-3167. ! ! ! ! Steve Gibbs, CLU, RFC / Mahalo Financial Financial Advisor / President, Mahalo Advisory Services, LLC California Insurance License # 0A49146 !

16458 Bolsa Chica St. #410, Huntington Beach, CA 92649 / office (714) 465-3167 / fax (866) 894-4683 Steve@MahaloWealth.com / MahaloWealth.com
Steve Gibbs, Financial Advisor of Mahalo Advisory Services LLC (MAS), 5152 Robinwood Dr., Huntington Beach, CA 92649 (714) 465-3167. Advisory Services are offered through!MAS,!a!registered!investment!advisor!