Client Question
I am leaving my present job in a Fortune 500 company. I want to rollover my entire 401k balance into a Self-Directed IRA. My brother in-law is a Doctor and he recommended that I utilize my Self-Directed IRA to purchase real property and personal property. He said that my Self-Directed IRA could rent the real property and personal property. He also said that rent income to a Self-Directed IRA is not considered unrelated business income subject to a Federal tax beginning at 15%. Is he correct or should he stick to giving professional medical advice only?
Venuti’s Answer
If the real property isn’t acquired with debt financing by your Self-Directed IRA, rent income isn’t considered to be Unrelated Business Income Tax. Rent Income from personal property is considered Unrelated Business Income if personal property rent income exceeds 10% of the total rent income received by the Self-Directed IRA.
Please call me at 610-353-0686 or email me for assistance in preparing your Self-Directed IRA tax returns.
Warmly,
Stephen Venuti, CPA
