Self Directed Roth IRA LLC owns duplex, rent one side from LLC?

[doni49]

I'm considering the possibility of setting up a Self Directed Roth IRA LLC and purchasing a duplex in the name of the duplex. If I do this, I'd like to live in one of the units. I would of course pay FMV rent to the LLC -- the unit I want to live in is currently rented for $500/mo and I would pay that amount from my personal account to the LLC monthly.

But I'm wondering if this would be legal. I understand that if the SDIRA owned the property directly, I would be considered a "Prohibited Person" but since the LLC would own it, I'm not sure.

[LadyInTheRed]

I don't think that will work: http://www.keytlaw.com/irallc/2013/0...ected-ira-llc/

I know very little about self directed IRAs and had never heard of a self directed Roth IRA before your post, so this is based only on a little internet research inspired by your post. If I understand, you want the LLC that is 100% owned by your self-directed IRA to purchase the duplex. Adding the additional layer of ownership does not keep you from being a disqualified person.

I am pretty sure that if somebody who is not a disqualified person owned more than 50% of the LLC or the building, you could rent a unit in the duplex. But, I suggest you consult with a tax attorney with experience in this specific area before doing that.

[doni49]

I don't think that will work: http://www.keytlaw.com/irallc/2013/0...ected-ira-llc/

I know very little about self directed IRAs and had never heard of a self directed Roth IRA before your post, so this is based only on a little internet research inspired by your post. If I understand, you want the LLC that is 100% owned by your self-directed IRA to purchase the duplex. Adding the additional layer of ownership does not keep you from being a disqualified person.

I am pretty sure that if somebody who is not a disqualified person owned more than 50% of the LLC or the building, you could rent a unit in the duplex. But, I suggest you consult with a tax attorney with experience in this specific area before doing that.

Thanks LITR. I've spent much of the afternoon researching this further and was quickly coming to the same conclusion.