Using My SDIRA As A Bank
I've just read a guru who suggested I could use my SDIRA as a bank in the following situation - I sell an asset that I own to an unrelated party (Mobile Home for example). Simultaneously my IRA loans the buyer the necessary funds to complete the purchase. His argument is that there is no direct transaction between me and my IRA. I get the cash and my IRA gets a note. Has anyone done any research in this area, is this an acceptable transaction or does it fall foul of the prohibited transaction rules? Please explain why you think it does or does not follow the rules.
Thanks in advance for any and all thoughts.
Seems like a workable plan to me as long as your SDIRA isn't loaning it to you or any entity you're controlling.
But I'd run it by one of the folk back at MidOhio, or whatever SDIRA custodian you're using, to see if they've seen any complications come from such.
I'd just make sure the borrower is absolutely obligated to repay the loan, and YOU aren't on that note in any way.
And I think I'd have my lawyer look it over to make sure your IRA is definitely not making a loan to you, but to the 3d party, who is going to owe it back to you without any reserve whatever.
[addsig]
Well, I asked the same question on a Q/A board of a major SDIRA custodian (not mine as it happens). Paraphrasing, the answer was as follows - any transaction done indirectly that can be done directly is a prohibited transaction. I now recall seeing this wriiten elsewhere. In essence, I am arranging for my client to do the deal with my IRA to avoid the appearance of direct dealing. In the eyes of the IRS my real intent is to take back a note then sell it to my IRA, which of course is a prohibited transaction.