Self Directed IRA LLC and After Tax Money LLC

[Reid Mathews]

Hey friends! If you create a Self Directed IRA LLC but don't have enough money in it to buy the property you want, can you use that LLC and then an after tax LLC to buy the property? And then would the two LLC's be joint owners of the property? Has anybody done this and does it get complicated or did you have an easy time doing it? Love y'all!

[Brian Eastman]

@Reid Mathews

There are those that promote such joint ventures.  We recommend avoiding such a transaction due to IRS risk and a real lack of clarity on the topic from the IRS or the tax courts.

IRS rules prohibit any direct or indirect transactions or provision of benefit between a plan and a disqualified party. A LLC you own is a disqualified party to your IRA. Even if you create and maintain a very rigid joint venture transaction, there is the possibility of benefit if either party is enabled to participate in a transaction that it could not otherwise.

The IRA LLC may obtain a non-recourse mortgage or joint venture with an unrelated party and both of those options are much cleaner.