Lafayette, LA · Member since 2015 · 9 posts · 2 votes
If I were to purchase an investment property utilizing funds from my SDIRA and thus owned by the LLC which my SDIRA is invested in, would it be legal for me to purchase that property using my personal from that LLC?
It depends, @Jon Crosby is correct you are a disqualified person, however you can request a Prohibited Transaction Exemption (PTE) from the IRS/DOL. They have been lenient in this area and granting them — as with the IRS it takes time, rules you have to follow, and pay an application fee.
You can always take an “in-kind” distribution from your Ira
Investor · Roseville, CA · Member since 2016 · 893 posts · 1k+ votes
7y
**Disclaimer: I am not a CPA, Tax Professional or Tax Attorney...I just play one on TV** :)
Interesting questions @Brad Tarry, so you want to liquidate the property being held in your SDIRA to yourself right?
Unfortunately I believe the answer is no...you are considered a disqualified individual by which you cannot engage in a transaction with. Here is a quick rundown for you on those people however if you want to review yourself:
Disqualified persons are individuals or entities between whom or which an IRA is prohibited (absent a special exception) from engaging in any direct or indirect sale or exchange or leasing of any property; lending of money or other extension of credit; furnishing goods, services or facilities; or transferring to or permitting the use of IRA income or assets.
Fiduciaries (which in the case of a self-directed IRA includes you, as the IRA owner).
The following family members of the IRA owner:
Spouse;
Parents;
Grandparents and Great-Grandparents;
Children (and their spouses);
Grandchildren and Great-Grandchildren (and their spouses).
Service providers of the IRA (e.g., IRA custodian, CPA, financial planner).
An entity (such as a corporation, partnership, limited liability company, trust or estate) of which 50% or more is owned directly or indirectly or held by a fiduciary or service provider; also a partner which holds 10% of a joint ventur of such entity.
It depends, @Jon Crosby is correct you are a disqualified person, however you can request a Prohibited Transaction Exemption (PTE) from the IRS/DOL. They have been lenient in this area and granting them — as with the IRS it takes time, rules you have to follow, and pay an application fee.
You can always take an “in-kind” distribution from your Ira
You are disqualified person and there is no general exception for the LLC to sell the property to you. Agree that you could take the property as in-kind distribution and pay the taxes (and possibly penalties) based on the value of the property.