Rental Property in an IRA and/or 401k
I have a friend, in his late 70’s, who has an IRA and 401k. He works full time and is taking RMD’s from the IRA. He wants the IRA and/or the 401k to purchase and own homes for each of his two daughters, who will then pay him rent. How does he go about finding a company willing to act as trustee or custodian for this, and who will make sure he avoids the many traps and pitfalls of a self-directed IRA or 401k owing rental real estate?
Permalink Submitted by Alan Spross on Wed, 2012-11-07 02:36
Hopefully, he will not find an IRA custodian because his daughters are “disqualified persons” with respect to his IRA. That means that renting an IRA owned residence to them is a prohibited transaction whether they pay him a fair rental value or not.