Holding Debt Financed or Leveraged Real Estate

Sterling Trust permits the holding of debt-financed real estate which is subject to a non-recourse promissory note issued by a corporate lender or by the seller of the property. Sterling will only process debt-financed real estate in IRAs.

In considering whether to invest in real estate through your Sterling Trust IRA utilizing Debt Financing, here are some important points to keep in mind:

Be sure to obtain Sterling Trust's Processing Checklist for Real Estate prior to executing a contract or setting a closing date. There are items you will need to provide to Sterling Trust prior to setting a closing date.
Sterling Trust will hold debt-financed property in an IRA only with the use of a non-recourse promissory note issued by a lending institution or by the seller of the property.
An IRA accountholder cannot personally guarantee the non-recourse promissory note. The lending institution or seller of the property can only look to the property securing the note as collateral.
Debt-financed property may generate Unrelated Business Taxable Income (“UBTI”), and any tax due must be paid by the account. For more information regarding UBTI, please consult your tax advisor.
As you may be aware, IRA investment real estate transactions typically are all cash deals; however, debt-financed transactions are also possible through the use of a non-recourse loan to the IRA. They are becoming more and more common due to non-recourse loan providers being easier to locate.

Please contact us for more information at stcservices@uwbank.com or 800-955-3434.

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Lending institutions that offer non-recourse financing:

North American Savings Bank

949 NE Columbus St
Lee’s Summit, MO 64086
Ph: 866-735-6272 or (816) 246-1000
Website: www.iralending.com
Lending areas: Throughout the U.S.

NOTE: By clicking the link above you are leaving Sterling Trust’s website.

The list above represents banks that currently offer non-recourse financing. Each will have their own standards and requirements that you must meet. Sterling Trust does not receive any remuneration from any of the above listed banks. This list is being provided as a service to you and should not be construed as an endorsement or recommendation and is intended for informational purposes only. They are not meant to provide financial, tax, legal or other professional advice or recommendations. You are encouraged to seek professional advice regarding these matters.