Sell a Property to a Self Directed IRA

2 Replies

My wife and I have a rental property we bought almost 10 years ago. We have a mortgage on it. We also have a 401K that can be converted to a self directed IRA. Would be be possible and, if so, advisable, to "sell" the property to the SDIRA and allow it to grow and collect rents there? I guess the legality of whether or not it could acquire the property and pay off the note is the primary question.

Thanks

Wayne

@Wayne Emminizer

You absolutely may not do that.

While a self directed IRA or 401(k) can invest in real estate instead of just stocks, it is still a tax-sheltered retirement plan. That tax-sheltering comes with IRS rules that strictly prohibit any kind of self-dealing whether direct or indirect. You cannot use your plan to transact with yourself in any way, and to do so would invalidate the plan and forsake the tax-sheltered status.

Thanks Brian. I figured it would be that way and I know I could buy it directly but figured there would be no way to "move" it now to the IRA. Thanks for the follow up though.