self directed IRA question - Posted by Helen

Posted by JHyre in Ohio on July 08, 2002 at 07:41:16:

Buying a MH from your LLC (as opposed to buying from a third party seller) is self-dealing…I’d be quite interested to hear if Mid-Ohio disagrees.

John Hyre

self directed IRA question - Posted by Helen

Posted by Helen on July 05, 2002 at 12:48:15:

Is it ethical/legal for my self directed IRA to pay one check to my LLC to purchase a mobile home. The home will be moved to private land and there are cleaning and moving costs involved. It seems a real hassle to me to have separate checks made out for costs. The main cost is moving it. The home is put in a trust with my MID Ohio account as beneficiary.

Re: self directed IRA question - Posted by Tony-VA

Posted by Tony-VA on July 08, 2002 at 11:49:49:

Chances are the IRA Trustee would simply want the documentation of costs. For example, you might show the cost of the home and then cost break downs for the move and set up. They might well just send you the one check for the total balance.

I am not certain but be sure to check with the Trustee as for some reason I believe that Rehab funding is not sanctioned but I could be wrong. Mid-Ohio or Entrust would be able to answer this. It may not apply to your case anyway.

As for sending the check to your LLC. This will be up to your Trustee’s interpretations. Chances are if your LLC, as a normal course of business, invests in these homes, and you have the documentation (title, purchase agreement) that shows that the home is being purchased directly from a 3rd party, the Trustee may be willing to cut you one check or wire transfer the funds (always a better idea than an out of state check no matter what the Trustee tells you).

The Trustee, and rightfully so, will want all the documentation to prove no self-dealing occurred. If this paper trail can be established, then I think they may work with you in dispersing the funds (sort of like a General Contractor but you would not receive any proceeds or fees). They will have all the receipts to prove where the money went and that you did not receive any personal benefit (outside of the IRA).

Be sure to check with your Trustee.

Best Wishes,