Investing through self directed IRA

[Sameer Jain]

Hi

I have some funds in my self directed Roth IRA . I am not sure if I pull funds from my account try to do a BRRRR strategy using Roth IRA funds . Is it permissible ?

I plan to pay the self directed account loan once the property is refinanced ? Is it allowed to use Roth IRA funds to build your property portfolio and keep the title in my name once we pay back the IRA loan ?

For example buy property X all cash using IRA funds and fund all cash rehab using IRA funds ? Get it refinanced to pull out the money and pay the IRA note . I keep the title in my name or my LLC name after the refinance and continue doing that to build my rental portfolio ? Is this transaction allowed by IRA or is there a better way to do BRRRR using IRA funds ? Please advise

[Dmitriy Fomichenko]

@Sameer Jain

It is not possible to do what you are proposing with your IRA. You can use self-directed IRA to invest in real estate, but you are not allowed to benefit from those investment personally. Your IRA is completely separate entity from you. 

While Solo 401k allows you to take a participant loan from your account, this is not possible with IRA. IRS does not allow personal loans form IRA. If you personally need the funds from an IRA the only way you can access those funds is to take a distribution. Which would be taxable event, plus penalties if you pull distribution prior to normal retirement age.

Much better alternative is to invest inside of your self-directed Roth IRA, focus on maximizing the returns and then enjoy tax-free income after 59 1/2.