Question: Do I have to get my IRA-owned real estate
appraised every year and how much will that cost?
If you own real estate property, you have to submit a
valuation to your administrator every year to ensure proper tax reporting by
your IRA administrator. A fair market valuation is used to establish or change
the value of a real estate holding. All
IRA custodians are required to provide a year-end value for IRA accounts. A
qualified real estate professional who is not a disqualified person to your IRA
may provide a comparative market analysis to meet this requirement.
When you reach retirement age, the IRS requires you to start
taking Required Minimum Distributions (RMDs) from your IRA. The RMD amount is
based on the value of your IRA assets as of Dec. 31 of the previous year.
Formal appraisals for the annual valuation are generally
expensive and they aren’t required, though they are acceptable. You can instead
get a valuation which is usually much cheaper, and sometimes free. Although an appraisal is a valuation, they are
not one and the same. We understand that real estate agents may not provide
appraisals, but they are qualified to determine the market value of a property.
Like all investments, due diligence is required to decide
what will work best for your IRA and its investments. New Direction IRA can
help with the administration and bookkeeping of your IRA, and will ensure your
transactions and/or conversions are done according to IRS code.
Browse our website for more answers to the most common questions and
concerns about self-directed IRAs. New Direction IRA is committed to providing
you with the best education so you can self-direct your IRA successfully.
