Can Wife's IRA & my IRA lend privately on same deal?

[Bryan C.]

Just want to make sure I understand this correctly....

My wife & I each have SDIRA's....I was thinking about contributing $38k & she contribute $24k on a deal.  We would be private lenders contributing on the same deal...my understanding is that this is prohibited??  

[Brian Eastman]

@Jacob Blackett

Your point is taken, but I could also tell you that I know a lot of folks who drive faster than the posted speed limit. It's only a bummer if you get caught. Mistakes with an IRA are much, much worse than speeding tickets.

The point @Dmitriy Fomichenko and I are making is twofold.  

1) speak with tax professionals before making critical decisions about investing with a self directed plan.  Associates and comments on a web forum are not tax advice and should not be taken as such.

2) It is possible to joint venture IRA accounts for a transaction such as ownership of real estate and not have the "indirect benefit" issue. With real estate, either party might be able to do the transaction on it's own. Perhaps not with cash, but in combination with a non-recourse mortgage. If either party "could" do the transaction stand alone, but chooses to joint venture, there is little risk of any real or perceived benefit created by access to the other parties funds. On a lending situation with just two lenders there is no such alternative funding that "could"come into play. You can either fund a note or you cannot. If you need access to the funds of a disqualified party in order for your IRA to participate - there is a benefit between the plan and that disqualified party, and therein lies the risk.

Another example would be a $1M loan with 10 investors each lending $100,000. If either IRA could chip in their $100,000, there is no conflict if both choose to invest in this larger deal, because the presence of the disqualified parties funds does not enable either IRA to participate in the deal.

There are a lot of ways to go out and create good returns for your IRA without taking unnecessary risk.