Attn: IRA gurus: can I do this? - Posted by Drew_TX

Posted by Bud Branstetter on August 28, 2000 at 10:20:16:

The concept of self dealing is when you personally get benefit from the IRA before the appropriate age and withdrawal criteria. The IRS would classify the transaction as a withdrawal and apply penalties with the tax due. Your IRA trustee should not allow it with you qualifying on the loan.

Now how you can proceed. Find another investor that will loan you the down payment for what ever deal you can make. Verify if the mortgage company is okay with his participation. If that investor has a note you can buy or a property you can loan on he may make you a deal. As long as the two deals are not tied together then you should be okay.

Attn: IRA gurus: can I do this? - Posted by Drew_TX

Posted by Drew_TX on August 25, 2000 at 18:04:35:

I currently have about $30K in my old company’s 401(k) plan. I would like to roll it into an IRA and invest those funds in real estate.

My question: can I use those IRA funds to buy an apartment complex that I live in? Or is that self-dealing, and a no-no?

Thanks for your response.

Re: Attn: IRA gurus: can I do this? - Posted by Bud Branstetter

Posted by Bud Branstetter on August 25, 2000 at 18:16:54:

As long as you pay fair market rents and the place is managed by someone else you shouldn’t have a problem. You personally can’t qualify for a loan but if you can get owner financing you’re okay too.

Re: Attn: IRA gurus: can I do this? - Posted by Drew_TX

Posted by Drew_TX on August 27, 2000 at 20:52:49:

I’m not sure I understand your response.

My idea is to take the $30K and buy a 4-unit complex – let’s say I put 10% down on a $300K 4-plex. I’d then live in one of the units and rent the other three, and try to break even.

I wouldn’t pay any rent for my unit, and I should be able to qualify for a loan… for the other 90%.

Is this okay?