Aimed at real estate brokers, see how IRAs can be used to buy real estate for investment. http://www.wealthflex.com/

1. Purchasing Investment Real
Estate Inside of an IRA
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2. Presented
by
Drew Bowlds, Regional Manager
ClearView Wealth Management, LLC
drewbowlds@cvwm.com
425-295-0814

3. ClearView Wealth Management, LLC
Investing With Clarity & Vision
Member of The ClearView Group, Inc.
Serving our Clients since 1986
371 NE Gilman Blvd, Suite 310
Issaquah, WA 98027
Phone: 425.557.0559
Toll Free: 866.557.1031
Fax: 425.557.0546
www.cvwm.com

4. Slide Title
Text

5. Securities and Advisory Services
Offered through
Centaurus Financial, Inc.
We Invest In Your Success
2300 East Katella Avenue, Suite 200
Anaheim, CA 92806
Phone: 800.880.4234
Fax: 714.456.1797
www.centaurusfinancial.com
Member FINRA and SIPC

6. Centaurus Financial, Inc. and ClearView Wealth
Management are not offering specific investment, tax
or legal advice in this educational workshop. This
material does not constitute, and is not intended to
constitute, an offering of securities.
Securities and Advisory Services offered through
Centaurus Financial, Inc., Member FINRA/SIPC, a
Registered Investment Advisor. ClearView Wealth
Management and Centaurus Financial, Inc. are not
affiliated
Disclosure

7.  Seven things you MUST know
about investing in Real Estate
in your IRA
 Options for holding title to the
property
 Financing considerations
 Tax considerations
 Other options for Real Estate
exposure in your IRA
The Ground
to Cover

8. Course
Goals
Upon completing this course you
will be prepared to:
 Explain to prospects/clients how to
invest in Real Estate through a self-
directed IRA
 Know how to properly write a P&S
agreement to purchase Real Estate
inside an IRA
 Use alternate methods (LLC) to
purchase Real Estate in an IRA

9. Seven
Things
You Must
Know
1. Your IRA cannot purchase property
owned by you or a disqualified person
One of the most common questions
about real estate IRA is: “Can my IRA
purchase a property that I currently
own?” The answer is always no.
IRS regulations don't allow transactions
that are considered "self-dealing," and
they don't allow your self-directed IRA to
buy property from or sell property to
any disqualified person, including
yourself.

10. Seven
Things
You Must
Know
2. You Cannot Have “Indirect Benefits”
from Property Owned by Your Self-
Directed IRA
Can your self-directed IRA purchase a
vacation home for you to occasionally
use? Can you rent office space for
yourself in a building that your self-
directed IRA owns?

11. Seven
Things
You Must
Know
No.
The purpose of the IRA is to provide for
your retirement at some future date. It's
not intended to benefit you (or any other
disqualified person) today. If your IRA
engages in a transaction that, in some
way, benefits you or a disqualified person,
this is considered an "indirect benefit".

12. Seven
Things
You Must
Know
3. IRA Investments Are Uniquely
Titled
You and your IRA are two separate
entities. As such the investment needs to
be titled in the name of your IRA—not to
you personally. All documents related to
the investment must be titled correctly to
avoid delays.
The correct title for most real estate IRA
investments is:
"Equity Trust Company Custodian [for
benefit of] (FBO) [Your Name] IRA"

13. Seven
Things
You Must
Know
4. Real Estate in an IRA Can be
Purchased without 100% Funding
from Your IRA
You can purchase property in more ways
than just an outright purchase of the full
amount from your account. These other
options include using undivided interest
and partnering with others. You can also
finance an investment with your IRA, but
it must be structured properly.

14. Seven
Things
You Must
Know
5. IRA Investments that Use
Financing Must Pay UBIT
Your self-directed IRA can purchase real
estate using financing as long as the loan
is non- recourse. If you do use financing,
unrelated business income tax (UBIT)
applies.

15. Seven
Things
You Must
Know
6. Real Estate IRA Income Must
Return to Your IRA
All expenses related to property owned
by your self-directed IRA (maintenance,
improvements, property taxes, condo
association fees, general bills, etc.) must
be paid from your IRA.

16. Seven
Things
You Must
Know
7. Real Estate IRA Income Must
Return to Your IRA
All income generated by property owned
by your self-directed IRA must be paid
into your IRA.
The information presented above is for educational purposes
only and should not be construed as tax, legal, or investment
advice. Whenever making an investment decision, please
consult with legal, tax, and accounting professionals.

17. Scenario #1 Bob Smith is purchasing a house at
4217 Plymouth Street and is offering
$400,000 (all cash offer) with $10,000
earnest money. Bob’s IRA is with XYZ
Trust Company
Draft a purchase and sale agreement

18. Scenario #2 Bob has formed an LLC ( “Bob’s IRA
LLC”) and has transferred the ownership
units into his IRA in exchange for
$425,000 in cash in a checking account
owned by the LLC.
How would this P&S be different?

19. Scenario #3 Bob wants to draft an offer to purchase
the property under his name “Bob Smith
and/or assigns” and he might decide to
purchase through his IRA prior to close.
Prohibited (Self-Dealing)

20. Scenario #4 Same offer Bob wants to use his LLC
and offer $425,000 but put 50% down
and finance the rest.
How should the offer read?
Should a financing contingency be
used?
Will a standard NWMLS form suffice?

21. Key Points
for Agents
 P&S must be titled “XYZ Trust
Company FBO “Clients Name IRA”
 Buyer cannot assign a P&S contract
to their IRA that is considered “self-
dealing”
 If IRA owner is using financing it
must be non-recourse and the
owner’s credit cannot be used to
underwrite the loan

22. Other
Prohibited
Transactions
The IRA owner “Realtor Bob” cannot
purchase property for his IRA from a
“disqualified person” or from himself.
(for a definition of disqualified person see
IRC 4946)

23. Things to
Watch Out
For
 Property must be titled correctly
 Custodian must sign all documents
including the P&S and closing
documents. Bob directs this through a
buy/sell direction letter
 All monies must come from/go to the
IRA this includes earnest money,
purchase dollars, repairs/maintenance,
etc.

24. Financing
If the property is financed:
Loan must be Non-Recourse.
Bob does not apply for credit based
on his creditworthiness; the lender
must be lending on the property as
sole collateral.
Seller financing is okay, just not
personal guarantee.

25. Tax
Consider-
ations
IRAs have inherent tax benefits
Traditional IRA: Taxes are deferred
until distributions are made, i.e. until
money is taken out of the account
ROTH IRA contributions are after tax
and therefore qualifying distributions
are not subject to tax

26. Tax
Considera-
tions
Buying Real Estate in an IRA is not
always the best way to go.
You cannot take advantage of
depreciation
Somewhat cumbersome process
Non-recourse financing on single-
family homes can be difficult to find
and nearly impossible for higher LTV’s
Custodial fees are not inexpensive

27. Tax
Considera-
tions
 Income may be subject to UBIT
“Unrelated Business Income Tax”
 Tax on unrelated business income
which comes from an activity
engaged in by a tax exempt
organization that is not related to
the purpose of that organization.
 UBIT is assessed only on the debt
financed portion.

28. Alternatives
Other ways to gain exposure to
investment Real Estate in your IRA
REITs – traded and non-traded
Interval Funds
Real Estate Funds
Limited Partnerships
Other

29. Next Step

30. Investing
with Clarity
& Vision
Thank you for attending our
seminar!
G. Drew Bowlds
425.557.0559
866.557.1031
www.wealthflex.com