Another great question we answer frequently…

Question:  A few weeks ago I attended an IRA seminar that you presented in Amarillo.  Since that time a client has contacted us seeking to purchase a resort lot in their IRA.  If purchased in the IRA, does this prevent the beneficiary from purchasing the lot from the IRA in the future?  If not, can the beneficiary purchase the lot from the IRA under a note receivable purchase?

Answer:  While the IRA owner COULD NOT use the property while it was in his or her IRA, the property COULD be taken as a distribution when they were ready to retire (or ready to use the property personally before retirement). Or,  the only way to purchase the lot from the IRA in the future is to get special permission from the Department of Labor through a Prohibited Transaction Exemption.  I have heard of them approving such purchases under certain circumstances, but it may not be worth the time and expense of getting the exemption.  That is a judgment call your client would need to make. I suppose that after the property was taken as a distribution your bank could make them a loan to pay taxes on the distribution, but NO, there would be no way for the IRA to “seller finance” the acquisition of the property from the IRA to the IRA owner.

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