Can we pay off tax of one self-directed IRA purchased property multiple year?

[Huiping S.]

Can experienced people share some experience for the tax of self-directed IRA properties?

1) If not sale the property, how to pay off the self-directed IRA purchased SFR tax?

2) To pay off the tax once, it is too much. Can we pay the tax during multiple years?

Thanks.

huiping

[Dmitriy Fomichenko]

@Huiping S.,

You are not allowed to sell IRA-owned property to yourself. If you wish to use this property as a residence the only options is "in-kind distribution". What that means is that instead of distributing cash from the IRA to yourself you distribute the asset "in-kind". The property must be appraised to determine current market value (distribution is a taxable event), then retitled from the IRA to your personal name, work with IRA custodian to process the distribution and then you can use the property personally. The entire distribution (market value of the property) will be taxable for the year in which you take the distribution. There is no option to split the tax bill over a few years.

Hope this helps!