Development issues with Self Directed Roth IRA property

[Rob K.]

I am interested in some input from some of the Self-Directed IRA folks on an opportunity I may have.

I currently own in my self-directed Roth IRA a free and clear triplex and an adjacent commercial lot well located on a street where a lot of re-development has been taking place and the local municipality has adopted ordinances favoring re-development. These properties have appreciated substantially since I acquired them.

An opportunity has arisen where I can purchase the residential property directly in back of my property which would eventually allow a doubling of size by aggregating the residential property with my IRA properties and be a very nice combined area for development.

If i were to purchase this new property, it would have to be outside of my IRA in order to make the numbers work.

I am over 59.5 and have had this Roth IRA for over 5 years. Assuming I did acquire this additional property personally and simply rented it out in the short term, what would be the best way to structure either a future sale or a combined development of both properties I would undertake myself in a few years? I suppose I could just take a distribution out of the Roth of the property to develop it combined with the back property, but I would like to keep the triplex and commercial lot in the Roth as long as possible and maximize my tax savings in the Roth IRA. If I were to sell the whole package to a developer down the line, I could structure this as a Roth sale transaction and another simultaneous transaction of the new property outside the IRA.

Anyone ever dealt with a similar situation? Prohibited transaction issues to be concerned with? Thanks in advance for any thoughts.