Refinance using self directed IRA

[Gonzalo Perez]

I purchased a rental property several years ago using my home equity line of credit from my primary residence. Can I now refinance my rental property using my self directed IRA to pay off my line of credit and transfer ownership to the SDIRA LLC?

[George Blower]

@Gonzalo Perez

Such transaction would result in a prohibited transaction.

Certain transactions between an IRA and its owner or an IRA and a "disqualified person" are specifically prohibited by law.

A prohibited transaction is a transaction between an IRA and a disqualified person that is prohibited by law.

The transaction that you are describing would run afoul with some or all of the following prohibited transaction rules:

Prohibited transactions generally include the following transactions:

• a transfer of plan income or assets to, or use of them by or for the benefit of, a disqualified person;
• any act of a fiduciary by which plan income or assets are used for his or her own interest;
• the receipt of consideration by a fiduciary for his or her own account from any party dealing with the plan in a transaction that involves plan income or assets;
• the sale, exchange, or lease of property between a plan and a disqualified person;
• lending money or extending credit between a plan and a disqualified person; and
• furnishing goods, services, or facilities between a plan and a disqualified person.