Private Placement & IRAs with Real Estate Rentals


Here at Lewis Realty Associates, Inc on Topsail Island, we handle both real estate sales and rentals (both vacation & long term rentals). We recently signed up a new property here in Surf City and learned a new concept!!


Most people understand that various types of IRAs are tax-free until you withdraw funds but here is where it gets really interesting!!


This particular vacation rental home owner had contracted with a company in La Jolla, CA called IRA Resources that handles IRA accounts. With their guidance, under IRS Code, they setup a way for the net rental proceeds from the vacation rental to be deposited in the owner's IRA account, tax free until time they withdraw it!!


There were several parameters that had to be meet to remain in compliance with the IRS:

  1. The property was placed in the name of IRA Resources.

  2. The net funds are to be sent directly to IRA Resources for deposit in the IRA account.

  3. The owner of the property cannot handle any monies therefore the management company must pay utility bills such as cable and electric from the rental proceeds.


This concept is called "Private Placement" and can be used for funds coming from many different sources even IRAs investing in other peoples ventures.

In years to come when the owner decided to retire or retrieve money from the IRA account, he will be taxed at the IRA levels which we understand is more advantageous. 

IRA Resources of course charge fees to administer the account however on inspection of the fees they seem to be nominal when calculated in the tax savings.

This concept looks to be a viable solution for vacation home or even long term rental owners to help build their retirement a bit more and shelter themselves from some tax burden today.

This is our first year handling a property that is involved in an IRA and we will be sure to report back any new findings we come across. Please note . . we are not accountants, please call your accountant or attorney for questions.

You can browse IRA Resources' website for more information.


Chris Rackley

Chris Rackley, President 910.328.5211- Lewis Realty Associates, Inc. - Surf City North Carolina