Property purchase with combined retirement and non-retirement

[Clarence Bell]

Hi,

I wanted to find out if anyone has done a property purchase using combined money from their self-directed IRA and funds outside their retirement as the down payment. I'm looking at combining both since commercial properties require a 25% down payment, but I know there are tax implications with how the business is set up so a portion of the profits goes back into the retirement account. I'm also planning to talk with a tax CPA and lawyer but wanted to hear from people who've done it already.

Thanks in advance!

[Brian Eastman]

@Clarence Bell

I would recommend against what you are considering, as it would be likely to create a self-dealing, prohibited transaction.

IRS rules prohibit and direct or indirect benefit between a plan and a disqualified party.

In your situation as described, it would appear that the IRA and possibly you as well would be unable to purchase the property independently without access to the funds of the other party. A situation where access to your funds into a deal enables the IRA to participate in a deal it could not do otherwise would be a benefit.