Selling property OUT of a SDIRA to prohibited party?

[Daniel Dietz]

Hello,
I have been doing a lot of reading here and otherwise of SDIRA's. I understand that a person cannot buy from, or sell to, a prohibited party, such as a parent or child.

My questions is this; if one party who owns a property in a SDIRA wants to sell it, and a prohibited party wants to buy it, either within a SDIRA or otherwise, are there certain rules that apply to the timeline of how long it would have to be owned by another outside party that is NOT a prohibited party - such as a 'fellow friendly investor'?

Thanks, Dan

[Brian Levredge]

Your IRA is not prohibited from owning a property that was once owned by an ascendent or descendent of yours, as long as it's an arm's length transaction. If for instance, your parents sold a property to a third party, who then sold it to you after ten years, then that would be fine.

The time frame between ownership would be the key issue, and to my knowledge there is no minimum on that which leaves a grey area open to interpretation. The shorter the time in between, the greater the risk to you.

As an aside, you may want to look into different investment strategies than owning real estate inside an IRA. There are plenty of threads about that subject here. Since there are no tax advantages to the IRA, you lose a lot of the benefits to owning real estate. Notes, and financing are a different story though. And I say that as someone who has owned multiple properties within my IRA.