Transferring property from SDIRA to LLC created later

[Craig Heckman]

I want to buy a property with a blend of Traditional self directed IRA and Roth self directed IRA. I'm in a hot market and concerned the deal will go fast. I would prefer to purchase via a LLC jointly owned by the two SDIRAS, but the LLC doesn't exist yet. I am concerned that I'll miss the deal given the lead time with LLC creation, TIN issuance, bank account creation, funds transfers, etc. However, I'd like to benefit from the liability protection that a LLC provides.

Would it be possible to purchase the property and title it directly to the IRAs, and then later quit claim deed to a LLC (once I've actually been able to create it)? Any downside to this? So long as the LLC is wholly owned by the IRAs, any risk of prohibited transaction?

[Brian Eastman]

@Craig Heckman

Forming a partnership LLC owned by two IRA accounts becomes considerably more complex and restrictive than a single-member IRA LLC. I would not rush into a transaction of that nature without speaking with a tax attorney who specializes in this area, and by that, I do not mean the sales consultant of an IRA LLC providing firm.

To your specific question, yes it is possible to acquire a property jointly as tenants in common with the two IRA's and then move that property into a LLC. Whether it makes sense to do so is the bigger question.