How To Use Your Self-Directed IRA For Real Estate Investing

Today, attorneys Toby Mathis, Esq., and Amanda Wynalda, Esq., delve into listener questions around topics like the benefits of LLCs for real estate investors, income-shifting tactics, and the implications of the Tax Cuts and Jobs Act on small business owners. The conversation also delves into the complexities of Qualified Business Income (QBI) deductions, using self-directed IRAs for real estate investments, and the tax implications of transferring appreciated property into LLCs. Submit your tax question to taxtuesday@andersonadvisors.com

Highlights/Topics:

• Have you attended an in-person or virtual Tax and Asset Protection Workshops?
• Anderson Advisors has done a great job of creating all the pieces of my estate, but I have no idea how to put it all together. All right, that's a great first one. In particular, how do the holding LLCs flow into my personal tax return and how does the LLC tax as a C-corp get reported on my personal returns? - if your entire structure is disregarded and you're reporting your rental properties on your Schedule E, page one, you would continue to report that exact same thing on Schedule E, page one.
• Can I expense my breeding stock as a dog breeder rather than do depreciation? - They have a seven-year useful life, as “business property”
• Can you please speak about QBI and how it is often missed by business owners? W-2 employees are not allowed to use it. Who else? On the one hand, S-Corps can claim 20% right away. Is this true? - C-corps are separate entities, this is geared to the small business owner
• As a real estate professional, can I also take the depreciation expense from syndications?
• How do I use my self-directed IRA to invest in real estate? - if you have a self-directed, then you can invest in what's considered, I guess, non-traditional types of investments, including real estate
• What is the tax impact of moving an appreciated property into a LLC? - you have like four choices disregarded partnership, S-corp, C-corp. But there's no such thing as LLCs for tax purposes. So we need to know a little more information.
• What are the differences between an HSA and an HRA Health? - HSA is a health savings account and an HRA is a health reimbursement account. So there's actually a number of differences.
• I have been depreciating my rentals for tax purposes. How can I benefit or switch to cost segregation? - They're business property and so residential real estate is depreciated on a 271/2 year useful life and commercial is 39 years.
• How should I set up my stock investing to avoid huge tax penalties? Penalties, yeah, don't worry about the penalties, it's the tax liabilities of making too much money.
• Do you have to be an LLC to get all the tax benefits from purchasing investment properties? - If we're talking about all the tax benefits, probably. But you don't have to have an LLC to own rental property.

Resources:

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