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Updated over 12 years ago on . Most recent reply

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Michael Campbell
  • SFR Investor
  • Valencia, CA
0
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22
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Can I Setup SDIRA Post Investment Purchase?

Michael Campbell
  • SFR Investor
  • Valencia, CA
Posted

Hey guys, new fellow on board.

I partner with my brother on rental properties, a gig we just started a year or so ago.. anyway for our last purchase I ran out of free cash and had to dip into my 401k rollover IRA - to the tune of $15k. Not a great idea, but the equity we walked into was worth it. Anyway, I know I have 2 months to either pay it back or get hit with taxes; but can I instead setup a SDIRA after the close? I'm sure it will complicate how my brother and I split this thing, but it may save me a few thou.

Thoughts?

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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
14,127
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22,059
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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
ModeratorReplied

Do you already have partial ownership of the property? if so, then, no your IRA cannot take ownership of it. You are a disqualified person w.r.t. the IRA. Any transaction your IRA performs with you is a prohibited transaction. That will result in the IRA being immediately and completely distributed and you will owe taxes and penalties.

Now, had you had this set up before hand, your IRA could have partnered with your brother to buy the property.

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