First IRA Mortgage, Inc.

First IRA is a wholesale, commercial lending company, exclusively focused on IRA mortgages.  We provide mortgage money to self-directed IRA trusts and retirement plans that need financing to buy investment real estate.   We do not provide loans for residential or owner-occupied properties.

The loans that we invest in are non-recourse loans made to IRAs and 401ks owned by individual investors. We do not speak with the IRA account holder. That is the mortgage broker's responsibility. CPAs and Accountants are also an integral part of a successful, self-directed, IRA real estate transaction.

Important Information for CPAs and Accountants

Pre-Qualification of an IRA account holder

First and foremost, First IRA encourages ALL individual IRA account holders to consult with their CPA, Registered Investment Advisor, Certified Financial Advisor, Certified Financial Planner or Administrator to see if real estate is a suitable investment inside their self-directed IRA trust or retirement plan. 

At First IRA, we do not feel that real estate is for everyone.  However, many IRA account holders can benefit from diversification of their retirement plans into real estate.  It is the job of the financial professional to qualify and educate prospective borrowers on the risks and rewards.

Know Your Customer Before Suggesting Investment Ideas
- Asset Allocation
- Risk Tolerance
- Prudent Man Rule
- ERISA / DOL
- Suitability
- Do they "Get it?"
- Proforma
- Vacancy Factors
- Assets – Reserves
- Diversification
- Police

Preparation of Tax Returns

IRA account holders who want to purchase real estate inside their IRAs will need to fill out and submit form 990T each April.

UBIT/UDFI – Unrelated Business Income Tax

Unrelated Business Income Tax “UBIT”
- Annual federal tax on income
- Tax imposed on annual net income earned by an exempt organization or trust not directly related to its exempt purpose

Unrelated Debt Financed Income “UDFI”
- A one time tax at the sale of the property, and a subset of UBIT
- Imposed tax on long term capital gain proportionate to the amount generated by leverage
- Qualified plans, like 401ks and Solo 401ks, are not subject to this in regard to leveraged real estate.
- There is no UBIT or UDFI tax at all if no debt is used

Filing and Reporting
- 990-T Form
- Used to report and pay UBIT
- Required to file if UBIT >$1000 per year

Tax Payments
- File and pay annually
- If expected tax >$500, then quarterly estimated payments are required

The Tax
- Must be paid from funds in IRA
- Paid at trust rate (~37.5%)

Other Tax Issues to Consider

- Taxes are deferred with a Traditional IRA until IRA distribution occurs
- Distributions are taxed at current ordinary income tax rate
- Distributions are tax-free with a Roth IRA if requirements are met
- Other restrictions may apply

- NOTE: All of the expenses on the property, such as property taxes, maintenance expenses, tax payments, hazard insurance, HOA dues, mortgage payments, Unrelated Business Taxable Income (UBIT), property manager fees, etc. must be paid from the retirement plan. For transactions involving real property, some custodians require a certain amount of cash in the account at the time of purchase to safeguard the account’s ability to pay expenses.

First IRA Works through a network of certified Channel Partner Professionals.

Every IRA trust has an IRA account holder who oversees the assets in the trust, and instructs their trustee or custodian to perform certain transactions inside their trust.  First IRA lends money to self-directed IRA trusts and LLCs, C corporations and other entities owned by self-directed IRA trusts.  

This distinction is important because it is the foundation of our business model: as a commercial, wholesale mortgage lender, First IRA does not liaise directly with the self-directed IRA account holders that wish to finance real estate investments inside their self-directed IRAs.  Instead, IRA account holders must work with one of our certified Channel Partner Professionals. 

Our Channel Partners provide self-directed IRA accout holders with rates and terms of our IRA mortgages.  Channel Partners take the IRA account holder's application, and submit it to First IRA Mortgage for underwriting and processing.

How to Join Our Network

Our Channel Partners benefit in many ways by becoming approved affiliates.  If you or your company wish to become a First IRA Channel Partner Professional or approved mortgage broker, please contact us or click the sign up link to find out more about our Channel Partner program and opportunities.