Can I loan my partner SDira funds to do a flip?

[Michael Murray]

I am partnering with a friend on a flip. Part of his funds will come from my SDira. He will be signing a promissory note and borrowing money from my SDira and paying interest. He will then use this money to help pay for the flip - both acquisition and rehab. I will be putting in my own cash as well. Is this ok?

I've run this by my custodian (Equity Trust) and they are giving me the thumbs up but I wanted a second set of eyes.

[Brian Eastman]

@Michael Murray

The support person you spoke with at Equity Trust is just flat out wrong.  Unfortunately, they are known to do that.  The reality is that as a custodian, they are not allowed to provide tax, legal or investment advice.  They provide "customer service" and do so with not very well trained staff.

A LLC that you own personally is a disqualified party to your IRA. If your IRA loans money to an unrelated 3rd party, who then puts that money into your personal LLC, or a transaction with your personal LLC, this is very clearly a prohibited, self-dealing transaction.