Use IRA’s to hold mortgage
I have self directed IRAs(Traditional and Roth) that I would like to use to hold mortgages for some of my grown children. Would this be possible and how many hoops would I have to jump through? Bob
I have self directed IRAs(Traditional and Roth) that I would like to use to hold mortgages for some of my grown children. Would this be possible and how many hoops would I have to jump through? Bob
Permalink Submitted by Gordon Weis on Sun, 2012-01-01 15:39
You may want to start by reviewing the Prohibited Transaction rules as they relate to an IRA…
[url]http://www.irs.gov/publications/p590/ch01.html#en_US_2011_publink1000230…
Permalink Submitted by Robert Bytner on Mon, 2012-01-02 15:10
Thanks for info. 590 speaks to traditional but dos not mention Roth. would Roth be handled differently?
Permalink Submitted by Alan Spross on Mon, 2012-01-02 17:03
Prohibited transaction rules apply equally to all forms of IRAs. They are addressed in Sec 4975 of the tax code.
With respect to your children, see p. 9 of the following article which defines who are disqualified persons with respect to the IRA, and indicates that lending of money to such persons is prohibited:
http://www.aba.com/NR/rdonlyres/D8BE9599-E5ED-4994-91CB-BF8B23A2AE7C/429…
Permalink Submitted by Robert Bytner on Mon, 2012-01-02 18:12
Thank you. This was much easier to understand than the verbiage in the 590. I’ll have to consider closing out the Roth & using that money.