It is important to understand exactly where your money is coming from and what you are doing with it. This is particularly important if you run a business, as you need to separate funds that are used for business purposes versus funds that are used for personal purposes.
What happens if you are a real estate investor? There are a few important points that you need to keep in mind regarding commingling.
A Definition Of Commingling
When someone is talking about commingling, they usually refer to the practice of mixing the funds you use for your real estate investments with the funds that you use for personal purposes.
If you decide to invest in real estate with other people, your real estate investment could become classified as a security, meaning that you might be required to adhere to rules and regulations that have been put forth by the Securities and Exchange Commission (SEC).
The SEC might require you to avoid commingling accounts by keeping your real estate investment funds separate from your personal funds.
What If You Own Rental Property?
If you own rental property, you may be required to separate your personal funds from the funds you use for your rental property. For example, depending on where you are located, you might not be allowed to deposit a security deposit into a bank account that also contains your personal funds.
When Is Commingling Now Allowed?
If you combine your personal assets with the assets of your business or a renter, you could be in violation of certain financial laws. If you work with an investment manager, your investment manager has a fiduciary responsibility to adhere to all standards and specifications when managing your assets. This means that if you are an investment manager, you need to be aware of when you are allowed to commingle and when you are not.
Familiarize Yourself With Rules And Regulations
Ultimately, there are situations where you may want to commingle, as it may make it easier for you to keep track of your accounts because there won’t be as many of them. On the other hand, there are situations where it could be illegal, so make sure you are familiar with all rules and regulations.
