Here's the scenario: Let's say that I have someone who wants to borrow money from me to buy or rehab a house (i.e. secured loan), but I do not have enough money in my personal savings or self directed IRA to make the loan. Could we draw up two notes where I personally loan for the first mortgage and my IRA loans for the second? I know personal and qualified funds cannot be mixed, but would this arrangement be okay, since there would be a separate instrument for each?

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    Be very careful about getting into the lending business with funds from an IRA and especially so for a self-directed IRA. Even if the unspecified "someone" is not a disqualified person, it is easy to engage in a prohibited transaction that will disqualify your IRA account. On the other hand, if you fully understand the relevant tax law already, then you don't need to ask here. Commented Mar 3, 2016 at 1:20

1 Answer 1


Technically these would be two unrelated loans from two unrelated entities. One from your person, and one from the IRA.

The loan from your person is trivial, but the loan from the IRA may cause troubles. Read carefully the warning Dilip@ wrote in his comment. I suggest you discuss this with a CPA/Attorney who specializes in self-directed IRA handling.

Keep in mind that for secured loans, there's subordination. You'll need to decide which loan will be first in line in case of foreclosure, and since your person and the IRA are related, this can cause the whole interaction being a "related-person transaction" which can blow the whole IRA up.

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