Can My Self-Directed IRA Purchase A Property that I Own?

Self-Directed IRA

In a self-directed IRA situation, people often ask: "Can my self-directed IRA purchase a property that I own or that a close family member owns?"

The Problem with Using IRA Money

The problem with using self-directed IRA money is that you're not supposed to get any personal benefit from the investment and if the investment is your personal home and your IRA is in effect buying your personal home you're definitely getting a direct and substantial benefit of having your IRA buy your home from you.

The same goes for close family members who are just basically extensions of yourself for tax purposes. If your daughter is getting a benefit in having sold the property to your self-directed IRA it's going to be the same as if you sold the property to the self-directed IRA because they are a related party.

Purchase Properties at an Arm's Length

If you want to keep your nose clean, don't get real cute with your self-directed IRA money. Purchase properties in an arm's length transaction from unrelated taxpayers that are not necessarily your family members or yourself.

  • 1031 Hotline: If you have questions about IRAs and 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

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