Buying international real estate with self-directed IRA

[cheddarpie]

Anyone have experience with this? I would love to hear your thoughts.

My cousins have self-directed IRAs that hold real estate in the U.S. They are now interested in buying a property overseas. Because the foreign country doesn't recognize an IRA as a legal entity, they have to set up an LLC of which their two IRAs will be members. To comply with IRS rules, they need a third-party manager of the LLC, which they've asked me to be. I'm trying to learn as much about this as I can before I decide to sign on.

Thanks!

[SeattleCPA]

We have experience as CPAs dealing with self-directed IRAs holding real estate.

General assessment: It's a terrible idea for most people.

More information on the details of this disaster here: https://evergreensmallbusiness.com/self-directed-ira-real-estate-investment-problems/

[cheddarpie]

Thanks, SeattleCPA -- this is all good to know. I'm not looking to make this kind of investment myself, and my cousins already have significant real estate holdings in their IRAs, so I think that horse has left the barn already.

I'm curious specifically about how it works to set up an LLC for international property investments, once the decision has already been made (rightly or wrongly) to go this route. 

[SeattleCPA]

I don't think there's necessarily anything special or different about investing in international real estate via an LLC.

I'm assuming cousins are using a US LLC... if they use a foreign equivalent, they may need to handle the entity classification a little differently because the default classifications work differently. But I don't see anything that's different here.