Mixing personal funds with SDIRA

[Account Closed]

I have been thinking about this for a while. Please keep in mind that I am NOT thinking about doing this but am just curious as to how this is enforced. If I have 100K in my SDIRA, bought a property for 90K, paid 10K out of the SDIRA for the rehab and another 15K from my other LLC's funds, how would they even know that I used non-SDIRA funds for part of the rehab?

I could just add the 15K to the bid from another rehab and pay the contractor, I am sure the contractor does not care which account he gets paid from.

[Eric M.]

Originally posted by Shaun Vembutty:

Steven,

That is just it though. How would the IRS even know that the total rehab was for 25K. I could just have the contractor submit an invoice for 10K and pay that from the SDIRA. For this to be discovered, the IRS would have to know the prior condition of the property, the extent of rehab done and what contractor typically charge for these items in that market.

Sounds to me like you have never been audited. When you are audited, they will find everything. Having an SDIRA makes you more likely to be audited I believe.
If you are never audited they won't catch you.