Can I partner with my S.D. Roth IRA to build on land I own?

[Teri Feeney Styers]

So I am already partnering with my SDRIRA on a flip - so I know how it works when investing. And I'm sure on Monday my accountant and my custodian could answer this question. But there are so many of you out there who can give me the answer sooner and I am not always patient... so here is the scenario: We are looking at purchasing a building lot to build our personal, primary residence. The lot is large enough and zoned appropriately to where we could build a second "cottage" to use as rental income. If we buy the lot and pay for the "main house" ourselves, can I use my Roth $$ to construct the cottage? Or does the Roth have to buy a percentage of the land too? And since we will be living next door, does this flunk the arms length test? Once we buy, build, sell current home, etc. there won't be a mortgage involved -so I don't have to worry about that portion... 

[David Dachtera]

@Teri Feeney Styers

Actually, you answered your own question when you mentioned you intend to use the land for your own primary residence. That would be a prohibited transaction. You personally cannot benefit from the SDIRA investment. It must produce a tangible profit, and that profit must go back into the IRA.

Again, check that with your financial professional (I'm not one). That's just my understanding of SDIRAs.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."
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