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?



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

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