Prohibited Transactions in Self Directed IRA's

[Robert Burns]

I need some input regarding a Self Directed IRA. If I bought a mobile home or other property through that IRA and collected the lease payments from a lease purchase agreement and paid the federal and state taxes would that constitute a prohibitive transaction? And if that constitutes a prohibitive transaction are there additional taxes I would need to pay. I would appreciate any feedback.

[Dmitriy Fomichenko]

If you buy property in an IRA, all expenses related to that property must be paid from IRA, you can not use personal funds to pay any of those expenses. In the same manner all of the income generated by this property must be going back into your IRA.

If you wish to take distribution from the IRA you can do so, subject to taxation (and penalties if you are under 59.5 years of age).