Self Directed IRA for owner Financing?

[Jeff Hink]

Has anybody used or are you able to use a self directed IRA to back a client that wants you to owner finance a house for them? What are the draw backs and/or how does this work?

[Gene Mitchell]

you can make it work, but the LLC in your IRA has to be the one to purchase the house first. It cannot purchase a house from you. Be very careful that you don't do a prohibited transaction. Also, if your LLC owns a house for less than one year it will be considered a flip and you will have non passive income which will be taxed.