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Self-Directed IRA

An SDIRA is a type of individual retirement account that allows investors to have more control over their investment choices compared to traditional IRAs, including residential or commercial properties, real estate notes, real estate partnerships, precious metals, private equity and placements, and more.

Tax-Deferred Growth

Any income generated by real estate investments within an SDIRA, such as rental income or capital gains, is tax-deferred. The income generated within the SDIRA is not subject to immediate taxation, allowing for potential compound growth over time.

Tax-Deferred Distributions

Since contributions and earnings grow tax-deferred over the years, distributions can be strategically planned to occur during retirement when the account holder may be in a lower tax bracket.

Tax-Advantaged Contributions

Contributions made to an SDIRA are typically tax-deductible, similar to traditional IRAs. This can result in immediate tax savings for the account holder.

Use of Leverage

SDIRAs can use leverage to finance real estate acquisitions. This means the IRA can take out a mortgage or other loans to fund a real estate purchase, potentially magnifying returns. 

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Self-Directed IRA

Designed to allow investors to have more control over their investment choices compared to traditional IRAs.

With an SDIRA, the account owner has the ability to direct and make investment decisions on a broader range of assets beyond the typical investment options offered by traditional IRA custodians.

Investment Flexibility

SDIRAs offer a broader range of investment options compared to traditional IRAs. While traditional IRAs typically limit investments to stocks, bonds, and mutual funds, SDIRAs allow for a diverse set of investments, including real estate, precious metals, private equity, certain types of loans, and more.

Real Estate Investments

One of the popular uses of SDIRAs is to invest in real estate. SDIRA owners can use their retirement funds to purchase residential or commercial properties, real estate notes, or even participate in real estate partnerships.

Real Estate Purchases

SDIRAs can be used to directly purchase real estate properties. This includes the acquisition of rental properties, commercial real estate, vacant land, or any other real estate investment that aligns with IRS regulations.

Real Estate Partnerships

SDIRAs can participate in real estate partnerships or joint ventures. This allows investors to pool their retirement funds with others to engage in larger real estate projects.

Real Estate Loans

SDIRAs can provide loans, including mortgages or promissory notes, secured by real estate. This allows for income generation through interest payments.

Real Estate Development

Investors can use SDIRAs to fund real estate development projects, including construction and property improvement initiatives.

Precious Metals

SDIRAs may allow for investments in precious metals, such as gold, silver, platinum, and palladium, providing diversification beyond traditional asset classes.

Private Equity and Private Placements

Investors can use SDIRAs to invest in private companies, startups, or participate in private placements. This offers opportunities for investors to access a broader range of investment opportunities.

Note Investing

SDIRAs allow for investments in promissory notes, mortgage notes, and other debt instruments, providing an avenue for fixed-income investments within the self-directed structure.

Checkbook Control

Some SDIRA owners choose to establish a checkbook control LLC (Limited Liability Company) within their SDIRA structure. This allows for quicker and more direct control over investment decisions.

Tax Advantages

SDIRAs offer tax advantages similar to traditional IRAs. Contributions may be tax-deductible, and earnings within the account grow tax-deferred. Withdrawals are generally taxed as ordinary income and may be subject to penalties if taken before retirement age.

Custodian Requirement

While SDIRAs provide more investment flexibility, they still require a custodian or trustee to ensure compliance with IRS rules. The custodian facilitates transactions and holds the assets on behalf of the account owner.


Anyone with earned income can contribute to a traditional IRA, subject to certain income limitations. Roth IRAs have income eligibility restrictions.

Types of SDIRAs

SDIRAs can be Traditional IRAs, Roth IRAs, SEP IRAs, or SIMPLE IRAs. The type of SDIRA can affect contribution limits and tax treatment.

Rollover Eligibility

Funds from existing IRAs or employer-sponsored retirement plans can be rolled over into an SDIRA without penalties. However, certain rules must be followed to execute a tax-free rollover.

Contribution Limits

Contribution limits for SDIRAs are the same as traditional and Roth IRAs. As of 2023, the annual contribution limit is $ 6,500 for those under age 50 (or $7,500 for those age 50 or older). 

It's important to note that while SDIRAs offer increased investment flexibility, they come with certain rules and regulations set by the Internal Revenue Service (IRS). Violating these rules can lead to penalties and adverse tax consequences. SDIRA holders are required to work with a qualified custodian to ensure compliance with IRS regulations. Book a Free Online Consultation to ensure SDIRAs fit your overall financial goals and tax strategy.

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