Can we use husband and wife SD Roth IRA's in one property?

4 Replies

My husband and I each have a SD Roth IRA. Each of these owns an LLC which is set up for real estate investing. IRA #1 was used to purchase tax liens which have now resulted in two properties being owned by the SD IRA. IRA #2 was used for note investing which will be paid back this month.

Question -- can we use money from IRA #2 to help pay for repairs that will be needed in the properties owned by IRA #1? We already track every penny of spending so we would know exactly what percentage came from each account in order to divide up the proceeds later on.

If that is OK then does the same approach apply if there is a net loss? We divide up the cash we get from the sale but it may not cover 100% of what went into the deal.

Originally posted by @Shera Gregory:

Question -- can we use money from IRA #2 to help pay for repairs that will be needed in the properties owned by IRA #1?

No, you can not, this would be prohibited transaction. If IRA #1 owns the property, all expenses for that property must be paid from the IRA #1. The same way all income and gains generated by the investments of the IRA #1 must go back into IRA #1.

@Shera Gregory  

@Dmitriy Fomichenko  

Dmitriy is right Shera. Disqualified persons and entities cannot engage in any exchange of goods, services, or benefit.

The only way you could make a partnership between both IRAs work is if you go out and purchase a new property and write the contract as tenants in common with an undivided interest. In that scenario, each IRA would be responsible for it's own portion. The reason this is legal is because the investors (each IRA) are independent of one another and dont exchange funds between one another. Make sense?

Thanks @Dmitriy Fomichenko. Good to have that clarified.

@Loren Whitney - I'm not sure I would go that far, but also good to know that there are options that could work. 

So as I understand it now, I could work with another investor with their IRA or non-IRA funds but they would have to be outside the disqualified parties group.

Not sure why my @s didn't work. I did the @? thing. Trying again .. 

Thanks @Dmitriy Fomichenko  . Good to have that clarified.

@Loren Whitney  - I'm not sure I would go that far, but also good to know that there are options that could work. 

So as I understand it now, I could work with another investor with their IRA or non-IRA funds but they would have to be outside the disqualified parties group.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here