My wife and I have been divorced for eight years. We have two college aged children whom she still claims as Dependents on her income tax return. I have a house in my Traditional SDIRA. Can I sell her this house, or is she considered a disqualified person because of my children being her dependents and living with her when they are not at college?
Don, why do you want to sell it to your ex? How much below market price? On what terms?
The rules state your wife is a disqualified person but she is not your wife so it seems it would be ok. However what @Dmitriy Fomichenko is asking is key. Are you "personally" getting a benefit from selling the IRA owned house to your exwife? I believe if the kids are living there it would be considered a personal benefit to you, a reduction in alimony, etc. would make it a prohibited transaction. The burden of proof will be on you to prove you did not or will not have a personal benefit. I believe it will be legally tough to do with your kids involved. I'm not sure of the answers to the questions asked above but before you do anything check with a tax attorney and/or accountant. Penalty can be severe based on the circumstances.
You may also ask the IRS for a prohibited transaction exemption PTE that would permit your Ira to sell the house to the ex-wife. This requires time and fees. Good luck. .
Yes as long as the house is sold at fair market value to your former spouse and not the kids.