Articles on IRAs

Sam's web Pages

Recorvery Rebate Credit
Mileage Deductions
Car Donation Deductions
Bad Debt Right Off
Hybrid Cars Deductions
Tax Cash Today at Western Union
CPA Moms - Services Offered
Tax Preparation
Electronic Filing
Enrolled Agents
Tax Moms
Recovery Rebate Credit
CPA Moms
Representation before IRS
Non Profit Tax Services
CPA Loan Letter
$7500 Downpayment for your Home
Self Directed Home Page
News about Self Directed IRA
List of IRA Articles
Want to Join CPA Moms?
Questions for CPA Moms?

Death & Taxes

We have Information to Help You with Either

Got Question for a CPA Mom?

IRS wants you to retire Financially Free!     We will answer your questions and give you options about how to become Financially Free when you retire

Tax answers/options when you sell your Home.      We will answer your questions about the tax free home sales and give you options on tax free exchanges

So, You got a letter from IRS?  We can help.    Letters from IRS are scary. We will answer your questions at no charge.

S-Corp, LLC, C-Corp, Partnership - Your Choice?    Selecting the correct Business Entity is confusing.  We will give you the tax options of each Business Entity.

How not to pay taxes when you sell income property.    We will explain how to do a tax free exchange & not pay taxes when you sell your income property.

  • Govt Sets Aside P10M For More Anti-flu Tablets (Yehey!)
    The government allocated P10 million to buy more medicines against the swine flu disease in humans, the Department of Health announced Thursday. Health Secretary Francisco Duque 3rd said President Gloria Arroyo directed his department to get the money from its budget.



How to Invest in Shopping Centers with IRA Funds as a Down Payment. Financing Tips You Don't Find in Books about Self-directed IRA

David V. Tran, Sr. Investment Advisor at eFunding, Inc. and Andrew La, Attorney/CPA/Broker.

Sunny Doe has been working as an Engineer in the Bay Area for more than 15 years. Over the years, he contributed to his company's 401K plan and has accumulated over $350K in his IRA rollover account. While it is very convenient to invest in stocks market, he noticed that the returns on the mutual funds in his IRA account are underperforming. As he grows older, Sunny faces the reality that his gray hair is not his asset but rather his liability in the high-tech field. He is also concerned about the volatility of the stock market. On a day the market is doing well, Sunny enjoys checking the balance of his account several times. On a bad day, he just feels depressed. The recent scandals about backdating stock options, restating financial results and Enron also shook his confidence in public corporations.

After learning that he can use money from a self-directed IRA to invest in real estate, he is motivated as he has been successful in real estate investment where he has more comfort and control. Learning that 44% of net worth per capita in the US is in real estate, he knows he is in the right direction. As he researches more, he learns he can use money from a self-directed IRA account as a down payment. But the IRS precludes any personal guarantee for the loan. This guarantee is a major restriction because all residential lenders require it. Non-recourse commercial loans in which the property itself is the only collateral do not require this personal guarantee. However, the lenders require borrowers to sign carve-outs guarantee to cover losses due to fraud or environmental contamination. This carve-outs guarantee is a gray area as no one knows for sure if the IRS considers it a kind of personal guarantee. So it is best to avoid signing this "carve-outs" guarantee if possible. In addition, most non-recourse commercial lenders are not familiar with loaning money to a self-directed IRA account with no social security number or federal tax ID as the borrowing entity. So they are somewhat hesitant in lending money especially when the self-directed IRA account is the only borrowing entity of the property. The so-called self-directed IRA and hard-money lenders that do not require the personal and carve-outs guarantees literally charge an arm and a leg, e.g. 8% to 12% interest for the loan. So, getting financing at a low rate seems to be the trickiest part. Having lived in the US of A for a long time, he knows: if there is a demand, then there must be a supply somewhere.

What is a self-directed IRA?
In 1974, Congress enacted The Employee Retirement Income Security Act (ERISA) which established IRA's to give us the freedom to make our own Individual Retirement Arrangement or IRA. ERISA allows you to open an IRA account and control the investment of your money. It did not state that you have to invest in stocks, bonds, or mutual funds. Most IRA companies choose to focus on stocks and mutual funds because it makes good business sense for them. It's kind of like if you go to McDonald's, you won't be able to get Sushi. So if you want to have more investment choices besides stocks and mutual funds, you have to use a service of a self-directed IRA company. Once you open a self-directed IRA account, you can use the money to invest in stocks, bonds, mutual funds, real estate, mortgage notes, businesses, precious metals and other assets.

Self-directed IRA Companies
Below are some of the companies that offer self-directed IRA accounts. They are listed in alphabetical order. The authors do not endorse any companies.

1. Equity Trust Company, (440) 323-5491,

2. IRA123, (888) 808-7687,

3. IRA Services, (650) 593-2221,

4. My Real Estate IRA, (866) 683-5228,

5. Pensco Trust, (866) 818-4472,

When you contact these companies for information about their fees, they normally provide a service menu and associated fees. Some are based on the size of the assets, some are based on the services you need.

There are 3 kinds of self-directed IRA companies. You need to know this to understand how they operate.

1. Custodian: this company holds the assets on your behalf and executes your instructions. It is normally a bank or entity approved by the IRS to hold the self-directed IRA assets.

2. Trustee: this company just holds the self-directed IRA assets. It's normally a bank.

3. Administrator: this company just does the paper work. It normally works with a trustee or a division of a bank.

What are some prohibited transactions or restrictions of a self-directed IRA?

1. You are not permitted to buy or sell a property between your IRA account and yourself, or your spouse, or your direct ascendants or descendant.

2. An IRA owner is not permitted to commingle self-directed IRA funds with his personal funds. However, the IRS allows an IRA owner to use personal funds to pay for incidental fees, e.g. closing costs.

Financing for Properties with self-directed IRA Funds
Sunny has several financing options:

1. Buy in cash: this is the easiest and most straight-forward way to invest with fund from a self-directed IRA. However, this puts a major restriction on size of his investment properties. Besides, Sunny loves the idea of using someone else's money to make money.

2. Get seller to finance: this may work out. However, most sellers prefer to get cash for their properties. The seller who agree to provide financing probably had a problem selling the property. And if so, there may be something wrong with the property.

3. Borrow money from a "self-directed IRA" or hard-money lender: these lenders charge very high interest rates, 8% to 12%. Sunny has a major problem with this kind of interest rate. The banks will end up keeping all of the profits!

4. Invest in syndicated properties: Sunny buys a commercial retail property together with other investors. All the co-owners apply for one non-recourse loan. As long as he owns less than 20-30% of the property (this limit is set by individual lender), the lender does not require him to sign any guarantee. This will satisfy the IRS restriction on personal guarantees. Sunny pays the lowest interest rate and can maximize leverage in the best properties. This is the best option for self-directed IRA investors as they co-own a better property at the lowest interest rate. Please refer to the article "What Investors Should Know about Real Estate Syndication" published by the same authors.

Income Tax:
Assuming Sunny deposits 25% and borrows 75% of the money to buy the property then 25% of the income will be taxed deferred. This cash flow will go back to his self-directed IRA account. The other 75% of the income attributable to the debt is subject to income tax called Unrelated Business Income Tax or UBIT tax at the trust rate. All of the rental expenses and depreciation are deductible from income. In addition, the first $1,000 of income is exempt from UBIT tax. When the property is sold, the IRA may avoid UBIT and capital gains tax if the debt had been paid off by principal payment at least one year before the sale.

Title to the property:
His self-directed IRA account, not Sunny Doe, must be on title to the property. For example if he has a self-directed IRA account with Pensco Trust, he must take title as "Pensco Trust FBO (For the Benefit Of) Sunny Doe's IRA".

The Happy Ending:
The syndicator suggests Sunny to consider investing with 4 other non-IRA investors in a $7.9M, 2-year old, 30,900 SF, 12-tenant, and 100% NNN leased upscale shopping center in Lawrenceville, which is a fast growing and prosperous city in the suburb of Atlanta, Georgia. The property is located in front of a Walmart Supercenter; so, he knows it's in a prime location. He also knows this shopping center is an ideal and safe property for his self-directed IRA due to its strong positive cash flow and long term leases compared to single-family residence. The property has a $6M non-recourse loan at a below market rate of 5.6% through 2016. So while the cap rate is respectable at 7.25%, the cash on cash return is over 9% because the interest rate is so low. After reviewing the brochure and financial information of the property, he signs the subscription agreement to move forward with the investment. Since Sunny owns less than 20% of the property, he does not have to sign any guarantees. And this satisfies the requirement from the IRS.

David V. Tran is a Senior Investment Advisor at eFunding, Inc., a Commercial Real Estate Brokerage, Commercial Real Estate Loans Broker, Property Management, self-direct IRA invesment and Syndication Company in San Jose, CA. His website is He may be contacted at (408) 288-5500. eFunding does business in all 50 states.

Andrew La is an independent attorney, CPA and Real Estate Broker in San Jose, CA. He may be conta

District, Murrysville Prepare For Redstone Tax Appeal Case (Murrysville Star)
Local officials want to make sure that their lawyers have all the right tools to fight a property-tax appeal case.  read more »
Fight For Astor Estate Mirrors Battle 50 Years Ago (New York Times)
Brooke Astor, who died two years ago, is at the center of a tug of war over her family?s fortune. A high-profile quarrel in 1959 involved the same issue in the same family.
Capital Gold Group Sees 'Gold Affiliate Program' Soar For 3rd Year (PR Newswire Via Yahoo! Finance)
Capital Gold Group, Inc. announced a 300% increase in financial advisor enrollment into its "Gold Affiliate Program" in the first quarter of 2009, the first known program of its kind in the U.S.
Protect Your Retirement Amid Job Transition (Tulsa World)
Today's economic and market environment has prompted many Americans to rethink their retirement strategies. If you are experiencing a job transition â particularly if the transition is unplanned and unexpected â such a reassessment may be particularly important for you.
Quick Bankruptcy Fix For Rhodes (Las Vegas Business Press)
Despite a rancorous start to the case, the Rhodes homebuilding companies stand poised for a relatively quick exit from Chapter 11 bankruptcy.
Weekend Guide (Pittsburgh Post-Gazette)
A list of things to do this weekend.
Govt Sets Aside P10M For More Anti-flu Tablets (Yehey!)
The government allocated P10 million to buy more medicines against the swine flu disease in humans, the Department of Health announced Thursday. Health Secretary Francisco Duque 3rd said President Gloria Arroyo directed his department to get the money from its budget.
People On The Move 4/27/09 (Southeast Missourian)
Area real estate agents attend state development meetings Wanda Duncan of Realty Executives of Cape County, Brenda Miller of ERA Realty, Jim and Jan McClanahan of Coldwell Banker/Abernathy Realty and...
More People Turning To Self-directed IRAs (The Salt Lake Tribune)
Tidwell says that Utahns who have lost their 401(k) nest eggs or done poorly in the stock market are seeking nontraditional investment options. Since September, the Bank of Utah has seen a 15 percent increase in the number of self-directed IRA accounts.
The Problem With Estate Planning (
Lifetime planning not only saves you a ton of tax dollars, but also significantly increases your wealth and makes the rest of your life less stressful. Of course, your lifetime plan will dovetail with your estate (death) plan.
PARK CITY '06: Hilary Brougher: "I Flirted With Being A Painter But Realized I Needed A Medium Involving Lots Of Other ... (indieWIRE)
Every day through the end of the Sundance Film Festival , including weekends, indieWIRE will be publishing two interviews with Sundance â06 competition filmmakers. Sixty filmmakers were given the opportunity to participate in an e-mail interview, and each was sent the same questions.
Offutt Inns: Be Our Guest (The Base)
One of the most diverse mechanisms on base is the Offutt AFB lodging facilities crew.
Public Notices (Columbia Star)
NOTICE OF UNCLAIMED VEHICLES/PUBLIC SALE The following vehicles are subject to towing, repair and/or storage liens; are declared to be abandoned pursuant to Section 56-5-5810,
Rhodesâ Lenders Want Him Out (Las Vegas Sun)
Rhodes Homes President Jim Rhodes is accused of misappropriating money by creditors who want him removed to prevent what they say is continued mismanagement. A bankruptcy filing alleges questionable activity, possibly even criminal, in the weeks leading up to the Chapter 11 bankruptcy filing March 31.
Public Notices (Columbia Star)
NOTICE OF UNCLAIMED VEHICLES/PUBLIC SALE The following vehicles are subject to towing, repair and/or storage liens; are declared to be abandoned pursuant to Section 56-5-5810,
Old Blanket Chest Nets $29K At Real Estate Sale (The Daily Item)
For 60 years, Ira A. Eister cherished the hand-painted blanket chest that had been passed down to family members through the years.
Signs Point To Bottoming Of Recession (The Washington Times)
Signs are growing that the nation's deep economic recession may have struck bottom. Consumers are back in business, increasing spending at a 2.2 percent rate in the January-to-March quarter after six months of retrenchment, and businesses seem to have gotten rid of most of their unwanted inventories with a massive $104 billion liquidation, according to a report Wednesday from the Commerce ...
Capital Gold Group 'Demand For Gold IRAs Doubled In 2009' (PR Newswire Via Yahoo! Finance)
Capital Gold Group, Inc., a premier provider of gold and other precious metals assets, confirmed today that demand for precious metals in self-directed IRAs has more than doubled since January 1, 2009.
Allegheny County Ordered To Reassess All Properties By State Supreme Court (Pittsburgh Tribune-Review)
The state Supreme Court ruled Wednesday that Allegheny County must reassess all properties in the county, but County Executive Dan Onorato noted the justices didn't say when or how.