- my wife is a real estate agent. Will the IRS (or someone) have an issue if she handles the transactions.
- I work for a property management company, that I would like to use to manage/coordinate the rehab. Will the IRS (or someone) have a problem with this
If the IRS rules you have engaged in a prohibited transaction like self-dealing, your IRA is considered fully distributed and you the money is subject to income tax along with any penalties for early withdrawal.
I’m definitely not interested in self-dealing or otherwise talking with the IRS. Even if I find some other real estate agent to use, self directing seems like a better alternative (for me) than investing in the stock market.
What about having the IRA as a shareholder in a C-Corp that I work for. I’m being told that this is also an option. I am waiting on confirmation of whether it could be an existing C-Corp or newly formed one. Can it be a 100% share holder, 49%, or what.
Once again, I will ultimately do whatever is typical - but I am also interested in knowing what is possible.
Anything over 49% is a prohibitted transaction. If you are principal employee or have too much control over the company, the IRS will consider it a prohibitted transaction. There is case law at the 17% ownership level.
You cannot do any work involved with the investment. That’s why real property is so difficult. It is possible, but the head ache factor is just so high.Tax liens, promissory notes, private placements, hard money loans, etc. are what is typically done.