LLC Rent House To Self

[Ryan Haase]

If you are investing in buy/hold/rent SFHs, could you rent a house to yourself that is held in the name of your llc? That way, repairs could be written off. Seems shady and unlikely, but I was just wondering how the law worked.

[Lew Payne]

Originally posted by @Lee S.:

Not sure how far off topic this question is, I had not thought of it until reading this thread. If you buy an investment property with your IRA, does it have to be all cash or can you finance part of it? Could you then rent the house from your IRA? No idea if this makes sense financially from the questions posed above however but interesting.

 The correct answer is - You can finance part of it, providing the financing comes in the form of a non-recourse loan by a disinterested party. When an IRA purchases real estate using a non-recourse mortgage loan, the debt financed portion of the property's profits is subject to unrelated business income tax. Similarly, if an IRA-owned property is sold while a percentage of ownership is still debt financed, the profits derived from the debt financed percentage is subject to unrelated business income tax.

As a result, only enter into this transaction with the approval of your CPA (or enrolled agent), as they will be the ones having to deal with the reporting issues.