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Prohibited Self Directed IRA Transactions Info & Help Guide:
Examples: Purchasing Real Estate from an entity owned or controlled by family > Back to Real Estate
Suppose a family member comes to you and suggests, you should purchase a piece of real estate owned by my business. This family member is offering you a great price and you'd like to go ahead with the investment using your self directed IRA. Before you proceed, you'll need to look at the list of disqualified persons to determine if your family member's entity is a prohibited person. If your family member is one of the individuals listed below, your IRA may not do business with that entity.
- You
- Your Spouse
- Your Ascendants
- Your Direct Descendants
- Your Direct Descendants' Spouses
- Certain Fiduciaries (CPAs, Attorneys, Financial Planners, etc.)
- Retirement Plans Held by Disqualified Persons
- Entities Owned or Controlled by Disqualified Persons
Just to reiterate the list above, your IRA may NOT invest in a property that your parents, grand parents, children, grand children, or any of their spouses own. This also applies to IRA accounts and Entities that these individuals own or control.
Result: NOT ALLOWED!
IRC tax code 4975 strictly prohibits an IRA holder from purchasing or selling a property to/from their direct lineal family and anyone else listed as a disqualified person using IRA funds. Any arrangement that leads to a self-benefit results in a prohibited transaction.
Note: Other family members such as Aunts, Uncles, Brothers, Sisters, Cousins, etc. are allowable by IRC Code 4975.
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IRA Provider Comparison
IRAProviderComparison.com has done a great job at putting together comparison charts for different self directed IRA providers. They give fee scenarios and help you decide which provider offers the best service for your needs. I recommend looking at this website before starting an account somewhere.
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New Direction IRA
Self Directed IRA Administrator. We recommend New Direction because their friendly staff have always been so helpful in explaining things and making sure our transactions are within the guidelines of the IRS.
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IRA Tax Services
Our family uses IRA Tax Services to help with the UBIT resulting from our rental property. IRA Tax Services was easy to work with and more knowledgable that my family CPA. Check these guys out!
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