Self Directed IRA doing a mortgage note for a SFR purchase
I am buying a SFR as an investment property. It is out of state and will not be used in any way personally.
I have a Self Directed IRA and would like to start trying out Mortgage notes.
Is it OK or prohibited to do a first and only mortgage on this property with my Self directed IRA?
So far one Trust Company says no and one says yes. Help! experience?
Cheers,
Buddy
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#1 New Member Introductions Contributor
- Solo 401k Expert
- Anaheim Hills, CA
Buddy,
the IRS rules are pretty clear: you are considered to be a "disqualified person" to your IRA and any transaction between the two is prohibited:
https://www.irs.gov/retirement-plans/plan-particip...
It is very important for you to understand the rules yourself, there are some online promoters who will tell you "yes" for everything just to get your business or our of ignorance, but ultimately you are the one responsible for every transaction in your IRA. Using your IRA to lend to yourself will be considered prohibited transaction by the IRS and will disqualify your IRA resulting in sever penalties.