self directed ira
Can a taxpayer purchase a commercial building in his self directed IRA and has his corporation, of which he is a 100% shareholder, become one of the tenants? If not, does it make a difference if his spouse purchases the building in her self directed IRA?
Permalink Submitted by Jose Morales on Tue, 2016-07-19 00:35
The answer to your first question is no, you cannot have your IRA purchase a commercial building and then rent space out to a corporation wholey owned by yourself. The second scenario is asking for trouble in my opinion, but it’s the kind of question you should invest the time and money to ask someone that can provide you with a thorough investigation of regs, past tax court rulings and written determinations before offering advice. In fact, I would say it’s the type of scenario you should be seeking a written determination from the IRS before taking a chance on stepping into a prohibited transaction.
Permalink Submitted by Alan - IRA critic on Tue, 2016-07-19 00:39
Permalink Submitted by Jose Morales on Tue, 2016-07-19 15:54
Hello Alan, glad to be back! I’ve been very busy the past year or so but I still check in from time to time. I completely agree with you regarding the view that the spouse purchasing the property and renting to the IRA would fall under self dealing, even though I’ve seen some in the “self-directed IRA” world think they can come up with creative ways to make that kind of arrangement work. I’d personally stay far away from anything with the faintest smell of self dealing.
Permalink Submitted by WILLIAM BROWNFIELD on Sat, 2017-09-09 19:47
Two questions: FIRST: I’ve read that one can set up an LLC that is owned by the IRA account, and have the LLC make the investment decisions. I am a real estate professional nearing retirement, and I am the sole owner of an LLC (which doesn’t own hard assets other than cash, which would be distributed before the sale, and has no liabilities). If I set up a self-directed IRA, can it acquire my LLC for a nominal amount (like a dollar?) so that I don’t have to create another one? I would then use that LLC to make a traditional commercial real estate investment (in which I currently have no ownership position or related conflicts). SECOND: Are annual reporting requirements for the IRA owned LLC any different than a Custodial account would be?