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Before heading into the new year, it’s important to conduct a review of your finances and investments. Many real estate investors have year-end expenses to check off their list. Do you have expenses that are due by December 31st? Here are several year-end reminders to consider.
Common Real Estate IRA Expenses
- HomeOwners Association (HOA)
- Business License Registration (if held in an LLC)
- Property Tax
- Property Manager
- City Tax
- Upgrades or Improvements
- Garbage or Sanitary Service
- Loan Payments
- Water and Electricity
3 Year-End Reminders for Real Estate
- All costs associated with the real estate investment must be paid out of the IRA, including repairs and maintenance expenses.
- Property managers may pay the real estate expenses and the custodian can reimburse the property manager, but the custodian cannot reimburse the client.
- You cannot receive any personal benefit from the property – or indirect benefit such as hiring a family member to manage the property. Please review the Disqualified Persons section on the IRS website.
Consider making an appointment with your investment adviser or tax professional to ensure that your finances are in good order prior to the end of the year. Be sure to research and conduct due diligence regarding your investment decisions to avoid any prohibited transactions causing expensive mishaps down the road.