Using a Checkbook IRA to purchase property is a great way to manage your investment portfolio, but there are important legal guidelines regarding disqualified parties that you need to know. Join David Moore of IRA Advantage in this episode to hear what he has to say about the details of this type of transaction.

When you look at a retirement account, what it can and can’t do, you have to look at two different factors. One, what the person wants to do. What do they want to invest in? An IRA can literally invest in anything other than collectibles, life insurance, contracts, or stock in a sub S-Corporation. So, could you buy real estate with an IRA? Certainly, you can buy real estate with an IRA! Can you buy real estate that you own? No, and the reason that the answer is no, is the second part of that question, are there rules on IRA investments with a checkbook IRA? Back to our two parts: one, what are you going to buy – two, who are you going to transact between or for the benefit of?

Any transaction between or for the benefit of a disqualified party is a prohibited transaction. And you are a disqualified party to your retirement account, as would be a spouse, parents, grandparents, kids, grandkids, their spouses, or any legal entity owned and controlling interest by one of those parties. Rarely is the investment a problem, what causes the problem is the transaction for or between disqualified parties. Buying examples of disqualified or prohibited transactions would be buying from your IRA or selling to your IRA, loaning money to, borrowing money from, all those things. Now what’s interesting though, is you can’t transact between or for the benefit of disqualified parties, but you can transact along WITH a disqualified party.

So, if you wanted to go out and buy a property jointly with a retirement account and personal money, you could do that. You could own the property tenancy in common or you could own it as additional members of a limited liability company. Those things are all possible when you’re working with these things. The issue with buying a property already owned though occurs because you’ve got a transaction between or for the benefit of the disqualified party and that’s not okay.

So, when you’re looking at taking your retirement account and go buy some property, just think new stuff. Think about new things that you don’t have. Understand you’re not going to be able to use that property personally nor could any other disqualified parties. An example of that would be your kid goes off to college, you want to buy a property with a retirement account, you can’t do that, because your kid’s a disqualified party to that retirement account... Watch below as David Moore of IRA Advantage walks us though the question, and head to IRAadvantage.net for more videos now!