ROTH Account

Submitted by James Sheehan on Mon, 2023-08-07 15:00

I have a large Roth IRA Account. Can I use it to build a home and live in the home while the value of the home remains in the Roth account?

Permalink Submitted by Alan - IRA critic on Mon, 2023-08-07 15:12

No. If you have a self directed Roth IRA holding real estate, that real estate cannot be used for your personal use or that of your immediate family members. Personal use includes living in the home or even providing your own labor to build it. This would result in a prohibited transaction and a forced distribution of your entire Roth account.
You can take a distribution from your Roth IRA and use that distribution to pay for construction expenses, and if you have held your Roth IRA for at least 5 years and this house is a “first home”, up to 10,000 (lifetime limit) of your gains could be distributed tax free.