Can I buy land with my SDIRA hold it and then sell it to a company I own?

[Jason Pender]

Can I buy land with an SDIRA, hold it for a period (2yrs for example) and then sell it to a company that I own? I ask because there is some land I'd like to buy and build on but I do not have enough $ in the SDIRA to buy th eland and build the house.

[Zachary Jensen]

You certainly could but I'd be worried about using the property for personal benefit or gain before selling it to your own company as it could be problematic. The primary purpose of holding the property should be for investment and not for personal use (in general). Remember that the IRS has strict rules regarding SDIRAs, and any violation of these rules could result in penalties and adverse tax consequences. For more info checkout IRC section 4975 or connect with a real estate-focused accountant. 

[Matt Devincenzo]

@Zachary Jensen could you clarify why you say he could sell to his own company in a few years? This would be a non arms length prohibited transaction and would potentially result in the entire IRA being distributed is my understanding...the only way this could be possible is if the OP is or becomes retirement age in the next two years. Then he could take the asset as a distribution without penalty and build on it.

[John Underwood]

I would not do this.  I'd get the money somewhere else.

[Brett Synicky]

You’re a disqualified person, so no you cannot do this. Of course your IRA can buy the land but you cannot personally benefit from that purchase. Doing this with disqualify, your IRA and potentially cause taxes and penalties. There may be some nuances, depending on how much of a percentage of that company you own but generally speaking, it’s best to stay away from this. As always consult your tax professional, and not just Bigger Pockets. 

 @Ashish Acharya may have something to add. 

[Zachary Jensen]

Quote from @Matt Devincenzo:

@Zachary Jensen could you clarify why you say he could sell to his own company in a few years? This would be a non arms length prohibited transaction and would potentially result in the entire IRA being distributed is my understanding...the only way this could be possible is if the OP is or becomes retirement age in the next two years. Then he could take the asset as a distribution without penalty and build on it.

 Indeed that is correct, forgive me if I wasn't clear. Just because you can doesn't mean you should. @Jason Pender mentioned he didn't have enough cash for the full thing, so while he could get it done with his IRA money, there would be tax implications similar to what you mentioned. I refer him to section 4975 to read more on these implications as I don't know his exact situation/facts and circumstances.

For other folks, here are some other entities that would, if you sold the property to, have negative tax consequences: 

• You
• Your spouse
• Any of your lineal ascendants or descendants (parents, children, grandchildren, and the spouses of children, grandchildren, — including legally adopted children)
• Any investment providers or fiduciaries of the IRA
• Any entity (like a corporation, LLC, or trust) where a disqualified person owns more than 50%
• Any entity (like previously listed) where the IRA account-holder is an officer, director, a 10% or more shareholder, or a highly compensated employee

[Jason Pender]

Thanks folks, another dead-end, back to the drawing board.

[Zachary Jensen]

Quote from @Jason Pender:

Thanks folks, another dead-end, back to the drawing board.

 Its always worth a shot! Best of luck with this