Tax implications of purchasing in Roth IRA with a co-signer

[Rich C.]

I currently have the funds available for downpayment and rehab costs in my roth IRA for a rental duplex (the rental duplex is bank owned and thus has no tenants). However I cannot qualify for a loan being an entrepreneur paying myself a tiny salary. I am wondering if I can have someone else, such as my parents, cosign the loan...and what the tax implications would be for this scenario. Perhaps I must stipulate my majority ownership through an LLC?

[Steven Hamilton II]

Originally posted by @Mitch Dowler:

I am not clear on how you are trying to make this purchase. Is this an invest to be owned by your Roth IRA? SDIRA investments can not have debt service that is personally guarranteed. It would have to be an non-recourse loan that only the IRA is responsible for. You may also be thinking of liquidating funds from the Roth IRA so that you personally own the investment. If you have a tiny salary how would you pay the mortgage if you had a vacancy in one or both units simultaneously? What about major repairs that can crop up unexpectedly?

Actually, if the transaction is entirely inside his SDIRA, a non linear family member(brother, sister, aunt or cousin etc.) can cosign the loan as a partner. That would mean a partnership return would need to be completed.

Example:

25% partner SDIRA

75% Partner brother