Self directed IRA's and SEPP

[swebby]

Can someone help me understand how SEPP rules apply to a self-directed IRA that owns real estate? What needs to be done to calculate value of the IRA? Could a real estate agent give appraisal with supporting documentation? Or do you need to contract with an appraisal company?

And just curious, what would happen if there wasn’t enough funds in checking account to pay distribution at some point? (not that I would ever let it get that close)

Thanks in advance,
Swebby

About me: I'm about to turn 55 and have about 70k in net income in commercial property (non-IRA) and about 5-600k in a self-directed IRA that also owns commercial property. I am thinking about retirement in the next year or two, wondering if I can access funds from the IRA to help pad income if needed, and how complicated a process it is.

 

[ronocnikral]

Off-topic: why did you put the real estate in the IRA? Just curious...

 

[swebby]

Because that's what I know. I've had good success with light industrial warehouses outside of my IRA. They have a quick payback, low overhead, longer term tenants, etc.

I'm investing about 400k in a property that will have a net income of 9-10k/mo. That's better than I can do with anything else.

 

[ronocnikral]

Fair enough. To answer your question, the same SEPP rules would apply as if you held a mutual fund. OF course, the value of your property will probably be questioned year in and year out by the IRS. And you could expect them to make sure no prohibited transactions are taking place as well. You can visit 72t.net to get all the information you need on the SEPP.

I hope you have a tax professional who knows their stuff about owning real estate within an IRA. Of course, if you did, you could just ask them...

Real Estate in Your IRA

 

[swebby]

I have both an accountant and an attorney and I'll of course consult them before making any moves. This is just an information expedition, and I was hoping to find someone who has actual experience with it.

I find it's helpful to do some home work on my own before going to the professionals with questions. Less frustrating for them and more fruitful for me.

I've searched the website you mentioned, but didn't find any real life examples of how it's done.