Big Loan from IRA

Today TaxMama hears from Kandi in the TaxQuips Forum with a personal opportunity. (Let me paraphrase the question.) “A friend wants to loan me money from his IRA, but is afraid of having to pay all the taxes when he draws the money out. Is there a way to do this and avoid the taxes?”

Dear Kandi,

Of course there is. And TaxMama knows all. But…If your friend has that much money sitting in an IRA, he should be consulting with a competent tax professional.

He should investigate the concept of a self-directed IRA. It will a cost bit of money to set that up.
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But from that IRA, he can lend you money.

No, it will not make sense for him to OWN the home you buy. That would prevent the IRA ‘loan’ from being a non-taxable transaction – and you also lose out, not getting the mortgage interest deduction.

Yes, it WOULD make sense for the loan to be secured against your home, just like any regular mortgage.
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Your friend can talk to Dan Cordoba at to help set up that self-directed IRA.  This can be arranged relatively quickly – and he avoids all the taxes.

You can pay the fees for him as part of your loan costs – but will simply have to add that to the cost of your home.

And remember, you can find answers to all kinds of questions about avoiding large amounts of taxes, and other tax issues, free. Where? Where else? At

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