Not enough money in self directed IRA

[Chris C.]

I understand that you can use a self directed IRA to buy a property (either in full or as the down payment). But say you use it all as the down payment, then you suddenly have a 10k repair that you need (roof broke, hot water heater failed, and HVAC broke all at the same time). Its my understanding that since the property is owned by the IRA, all profits have to go into your IRA. But if you don't have enough to cover expenses, can you fund the expenses from non-IRA accounts?

[Brian Eastman]

@Chris C.

The situation you outline would be problematic. Other than by the normal means of IRA contributions, you may not personally add funds to the IRA.

Most lenders offering non-recourse loans to an IRA borrower will require significant cash reserves in the IRA for this very reason.

Since you cannot add funds personally, the IRA may need to bring on a joint-venture partner or take a loan from someone who is not a disqualified party to cover a short term cash crisis as you describe.