Using IRA money for a mortgage
I have a client who wants to give his closely held real estate corp a mortgage. Is it possible and how can it be done?
I have a client who wants to give his closely held real estate corp a mortgage. Is it possible and how can it be done?
Permalink Submitted by BruceM on Wed, 2008-12-03 21:36
If you mean can the client loan his corporation $$ from his IRA, the answer is probably not…that is, if he did, he’d likely run afoul of the prohibited transactions rule and the IRS would consider the loan a distribution. As the IRA owner and as a majority shareholder of his company he is a disqualified person and with few exceptions, cannot self-deal transactions with his IRA. However, he could directly purchase investment RE within his IRA, but this has to be done through a third party custodian who must conduct all transactions including property management…not him.
BruceM