Use Self Directed IRA To Purchase RE Through LLC
What is the legally appropriate method to purchase real estate with IRA money? I have directed my IRA custodian/ trust company to purchased shares of my LLC, which I believe I can now use to purchase property. However, it appears that that many CPAs are pushing the process that a Trust Company (such as Sterling-Trust or Pensco) must actually purchase the property instead of my LLC. These Trust companys are requesting hefty fees to do this. Does the tax code require that the Trust Company purchase the asset or can I purchase property through my LLC ? Many thanks to those who can help! 
I too am in the process of enlisting the services of a trustee for a SD IRA. I have contacted both firms you mentioned. See some add'l posts in the Taxes / Tax Stratagies forum as there have been some good information in recent weeks on this topic.
As you mentioned, the trustee (trust co.) owns the LLC. There may be fees and more importantly a time lag to have the transaction approved and funds dispursed. They will expidate for ......a fee.
You may wish to look into www.guidantfinancial.com. They are also one of the major trust co's that are geared towards REI SD IRA. Their arrangement is for you to have a checkbook rather than them, to make the transactions. They will provide all the support that the other firms do to keep the transactions correct.
Furthermore, what do you consider hefty fees ? $150 - $800 a yr ( + LLC costs) to actively participate in REI w/ SD IRA seems to be ok with me.
I don't think your LLC can own the RE. The whole concept of the 3rd party self-directed IRA is for "you" to choose which vehicle you want to invest in-not just stocks and bonds. The IRA "owns " the property and all monies get dispersed from it and profits go back to it. Remember, the IRA is tax deferred so you don't really have access to the $$$. If your LLC had it , it would be accessable by you and not tax deferred. I like Equity Trust co. They charge one yearly fee for all your RE transactions. Go to www.trustetc.com/
Your self directed IRA CAN buy shares in an LLC, which can, in turn, own realty.
YOU should not personally own shares in that LLC together with your IRA, but of course you can be the actual manager and decision maker about what it buys.
Some accountants do prefer to have the SDIRA custodian, such as Equity Trust, Pensco, et al, buy the RE directly; others prefer their buying the LLC.
But either route is legal as per IR Code.
I personally prefer having the SDIRA custodian buy the LLC shares, and that way they're not in the day-to-day loop with all the issues surrounding managing the realty while the IRA owns it.
Why would you want your Sd IRA to buy share in your LLC. Your SD IRA already has a trustee - the custodian of the SD IRA. So you do the investing directly that way. Your LLC cannot profit from stuff your SD IRA does as that is self -interest.
You can invest directly in RE using the SD IRA so the LLC is not necessary for that[ Edited by linlin on Date 11/17/2004 ]
"Your LLC cannot profit from stuff your SD IRA does as that is self -interest. "
Not totally true. If you start a brand new LLC and have your SDIRA to buy all the units, or buys some of the units along with a 3d party or several 3d parties, and you personally own none, no illegal self dealing is invlolved.
He said that it is HIS llc and not an LLC he is merly managing.