- How many properties they can fund/year before getting taxed (I didn't know there was a limit, nor did I know they could get taxed as it could be construed as a business if they did too many).
- The website states very clearly that ALL profits go back in to the IRA upon sale of the property and she wanted to know how I would be getting money in my pocket. Isn't she sweet thinking of me : )
I tried explaining to her that the note would spell out the terms and conditions regading how much they would earn from each property. So if we agreed that they would make $2k for a short term note and the profit was $10k after we sold the house, I would get $8k at closing. She wasn't understanding because, again, the website was very clear on where the profits went. So I said I would talk to Equity Trust the next day and get it spelled out for her.
Tuesday: I get my representative on the phone and start asking my moms questions. For the record, question #1 is 6-7 properties conservatively but more likely 10-12 purchases per year before a red flag is raised to the IRS. Okay, that sounds good - on to question #2. This is where things turn south. As I'm asking my question about my parents' IRA funding our purchase, how the terms are laid out, etc. he proceeds to tell me that that cannot be done. WHAT?! What do you mean it can't be done? Well, you are a "disqualified person" and your parents' IRA cannot lend to you it is against the IRS rules or some BS like that. I was soooo upset when I got off the phone. My mind would not stop racing on how I was going to get this to work without putting my parents money in jepardy of getting taxed, "A prohibited transaction can bring into question the tax-deferred status of the account, resulting in the disqualification of the self-directed IRA and severe tax and penalties". The first thing I did was send an email to my mentor at private money blueprint program. I'm currently waiting on his response.
In the meantime I started searching the web for an answer. It sounds like we can partner on deals where they put in 50% and I put in 50% (or whatever percentage you agree on) but they cannot fully fund a deal. I want 100% of the property purchased with private money.
So I'm pretty sure, not 100% but pretty damn close, that my parents will not be able to be a part of my program. All their money is in their retirement accounts and if they take any out they have to pay taxes. Not worth it and I completely understand!
Soooo, that's that.
Have not received the Insanity workout yet...
Headed off to listen to Steph's newest Wholesale success story interview. If interested head on over to www.flipthiswholesaler.net. You will get a ton of great content if you listen, I assure you!!