Is there ever a time when it is NOT wise to invest your IRA money into a great real estate deal?  You may be surprised to hear it, but the answer is, without a doubt, YES!  I’ll tell you when that’s true… and give you an extraordinary alternative.  I’m Bryan Ellis.  This is Episode #233 ---- Hello, Self Directed Investor Nation!  Welcome to another exciting edition of Self Directed Investor Radio, the show by savvy investors, for savvy investors where we help you to DECLARE INDEPENDENCE from Wall Street… and help you to build wealth for generations to come. This is is Episode #233 and you know what that means… you can find the transcript and show notes for today’s episode at SDIRadio.com/233.  And if you have questions or comments, you can post them right there at SDIRadio.com/233 or you can reach out on either Twitter or Facebook at SDITalk. My friends, a few months ago, a highly esteemed publication – none other than TheStreet.com, a major news source for the whole Wall Street crowd – asked me to begin writing for them, as there’s a very clear appetite on the part of many, many “conventional” investors to look at ways to invest their capital OUTSIDE of the monster known as Wall Street. The very first article I wrote for them – called “Avoid These 5 Traps When Buying Real Estate In Self-Directed IRA’s” – was promptly awarded an editor’s choice award, which is of course, gratifying, so thank you to the editorial team at TheStreet.com.  But that article and the 5 points within it point to a reality that is somewhat foreign to many investors like me and you who, completely reasonably, see the self-directed IRA and/or 401k as the best thing since sliced bread.  That reality is that:  Sometimes, it’s a good idea to AVOID buying real estate in your self-directed IRA. Here’s why: First, it’s actually possible you’ll pay MORE in taxes by doing so.  If you’re using a Roth IRA… no problem, your tax issue is solved.  But if you’re using a traditional account, remember that when you make withdrawals, those withdrawals are taxed at INCOME TAX rates, which are frequently MUCH HIGHER than the capital gains rates you’d likely pay if you did the same deal OUTSIDE of your IRA.  This is a complex issue, and merits some professional advice. The Second complication with buying real estate in your self-directed IRA is related to LEVERAGE… also known as getting a loan to buy property.  You absolutely CAN do that within a self-directed IRA.  But it’s complicated, and it does subject your IRA to present-day taxes based on a variety of factors we won’t dive into here.  Getting a loan to buy real estate OUTSIDE of an IRA is, by comparison, a rather simple, cut-and-dry sort of thing, so remember that if leverage is key to your strategy. The Third issue is that if you buy real estate in an IRA, you no longer get the benefit of other great real estate-specific tax advantages that render the IRA less meaningful, such as depreciation and the almighty 1031 exchange.  Those two benefits alone make it worth seriously considering doing a real estate deal OUTSIDE of an IRA rather than inside of it if you have that option. The fourth big issue for buying real estate in a self-directed IRA is connected with the notion of SWEAT EQUITY… the active investor’s best friend.  You know what I’m talking about… sweat equity is the increase in property value one receives by doing work on the property yourself rather than hiring out to expensive contractors.  But with a self-directed IRA, that issue is challenging because it’s very plausible and very reasonable for the IRS to view the work you’re doing on your IRA’s houses without being paid as a contribution to the plan beyond what’s allowed, and that can cause a big heap of trouble for you should Uncle Sam decide to have a closer look at your IRA. And the fifth big issue for buying real estate inside of a self directed IRA is this:  You’ve got the freedom to hang yourself.  What I mean is that you are, almost completely, u