As I understand it, IRS rules allow the purchase of real estate within a self-directed IRA as long as it's for "investment purposes" and not for personal use; i.e., you can't purchase a house that you, your dependents or relatives live in.
Is there a way to purchase property that later could be used as a personal residence? For example, to buy a piece of land that is held for a few years, then used to build a home on? If so, how would that work? Could the trustee be directed to sell the property out of the IRA to the IRA holder, or would the IRS consider that improper?
And lastly, I'm trying to think of a reason why you'd use tax-sheltered money inside an IRA to purchase a building lot in this way... perhaps because that's the only savings a person had available or as a large down payment on a bare lot loan.