Joint Ventures and Partnerships afford individuals the opportunity to enter into business arrangements with one or more individuals. This is a fantastic tool as it allows individuals to join forces and spreads the wealth and the expenses as each person contributes funds to not only cover the purchase but also any subsequent expenses that arise. The difference is that a partnership is generally a long-term arrangement while a joint venture is generally for a specified limited period of time or specific investment.
A little known fact is that your IRA can joint venture and/or partner with you and/or others that would be considered disqualified people so long as this partnership occurs at ‘the time of acquisition’. This is a winning situation that allows you to generate current income and to build your retirement account.
Consulting with the correct professionals is key in these situations including attorneys, CPAs, or financial advisors.
Joint Venture Example
A simple example of a joint venture would be the purchase of a single-family house. The self directed IRA invests with a non-disqualified person to purchase a house to rehabilitate and re-sell. When the house is sold, the joint venture is over with no further obligations to enter into any additional purchases. However, the joint venturers may, if they desire, do additional deals together.
An example of a partnership is a long-term formal written agreement to purchase multiple single family houses in order to rehabilitate and re-sell them. This long-term arrangement creates an ongoing business relationship between the parties.
At American IRA, we do this every day. We have simplified our process so that you can quickly and easily take care of your partnership and joint venture transactions. If you would like to open a new account or have questions about opening a new account, please contact our office 1-866-7500-IRA(472) or firstname.lastname@example.org. If you are an American IRA Client and you have questions regarding the investment process, please contact our office 1-866-7500-IRA(472) or email@example.com.