Self-Directed IRAs and Solo 401K

[@jeffjarvie4375]

Can Self-Directed IRAs and Solo 401k's take advantage of cost segregations on RE owned by the Self-directed LLC? If so, does the investor need to have Real Estate Professional status to take advantage of a cost segregation?

[@charlvanwyk2439]

So, if this is a Roth Self Directed IRA, you're investing to grow your money tax free. The money is after tax money, and already taxed. Cost segregations is a way to pay less taxes, but since the property is owned in a Roth SDIRA, the effort is moot - you're not paying taxes anyway. I have RE in my SDIRA Roth, and cannot claim any deductions or even depreciation. Once you start taking distributions, it will also be tax free. That is my understanding of this anyway. Listen to minute 21:00 in the video again.

[@TheWealthElevator]

No, this is exactly the issue with QRPs in general. The positive tax benefits such as losses don't flow to you personally. They stay insulated in your QRP.

[@jeffjarvie4375]

@@charlvanwyk2439 Thank you, very helpful comment. Yes, one RE investment is in fact a SDIRA in a Roth. I have another investment (9 units) in a Solo 401k SDIRA put into service in 2021. Does the same apply to this type of investment? This is of course a tax-free investment and also avoids UBIT and UDFI.

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