Getting real estate out of an IRA

[bdeancpa]

I have a client who has an IRA that owns some commercial real estate. The IRA is set up and managed well by a custodian who specialized in IRA real estate investments. The lease is coming due on the real estate and in not expected to be renewed. In addition, the value of the real estate is appriciating significantly causing concerns about RMDs down the road. The client would like to distribute the real estate and own it personally but doesn't want to pay tax on the entire amount now. Can he sell the real estate, form his IRA to himself, or do prohibited transaction rules prohibit it?

Thanks for any suggestions on how to get the building into his name personally.

Dean Huber

[mbozek]

See IRS Publication 590, P43 available at irs.gov for description of prohibited transactions between an IRA and the owner.

[John G]

I can't answer your question. But your post is just another indication of the problems that can come from owning real estate in an IRA. We usually talk about the prohibitions and downsides..... it is interesting to see that "success" can also trigger problems.

Real Estate questions have come up before at this website - primarily "I want to start doing real estate in my IRA" type. (which for most people is not a good idea)

We have very few people who post at this website that have indebth knowledge about real estate transactions in IRAs. You may need to look elsewhere for input on your situation.