Self directed IRA allowable activity question

[Daniel B.]

Hi,

On self directed Iras I understand it is more about who you can invest with vs what you can invest in,

And my IRA can not self deal with myself or most of my immediate family members. I have done 1 self directed Ira note to a builder.

I was previously told by my self directed Ira rep that I could sell a lot to a builder and my IRA could give the builder a loan since my Ira is not directly dealing with myself, the builder is in between us. This is the customer service rep on the phone so I wanted to double check this, but that is what I was told.

With that background, my question is, can I sell my personal primary residence and have my Ira fund or partially fund the buyer at let’s say 4% fixed for a period of time? The price would be close to an appraised price. I realize appraisals based on sales from the last year are based on lower interest rates. My thought is I can still get the same value if buyers had access to similar financing. My Ira funds are sitting in cash earning nothing so earning 4% fixed for 5-10 years I am ok with. I would not invest it now as some are whispering a recession is coming. We built our home new 4 years ago so I am comfortable with it as an investment. We owe $280,000. New homes sales (a premium) have sold for the $700,000-$850,000 range, I’m assuming ours is worth $650,000.

If yes to the above, could i personally take a note for 1/2 and my Ira take a note for the other half (subject to down payment from buyer).

Is this allowed?

Thanks!

[Brian Eastman]

@Daniel B.

DO NOT DO THAT.

The IRS rules prohibit any direct or indirect transactions or provision of benefit between a plan and a disqualified person. The transaction you describe is use of your IRA to facilitate the sale of your personal residence, which is clearly such a self-dealing transaction.

An IRA custodian is not capable of providing tax advice. They are simply processing agents. The person you spoke with should not be giving you advice in the first place, and should be embarrassed by the bad information they provided.