Guidant Financial Group Blog

One website indicated that if I "sweep the floors" in the rental house owned by my self-directed IRA, then I might be violating IRS rules by making an "unreported contribution." I realize that this was an exaggerated example, but is there a limit on something like this? For example, let's say I buy a rental property and then remodel it myself. Even though I am not paying myself any money, I am saving thousands of dollars – does this qualify as an unreported contribution?

-- Gary

The IRS code states that your IRA cannot benefit from you, personally, as the IRA owner. This means that you cannot perform any task on a piece of property owned by your self-directed IRA that would add capital value to the investment.

Although some sites tend to go a bit overboard, the main thing you have to ask yourself is: Is my work adding value to the property? For example, if you were to sweep the floors (as in your original question), you would not be adding any capital value to the property. If you were to put in a new carpet, however, you would be adding value to the property.

So, from this example, you can see that you will not be able to personally remodel a home that is owned by your IRA. You can perform minor maintenance and upkeep (i.e., mowing the lawn, replacing a light bulb); however, you will not be able to perform more substantial tasks.

If you have any questions about whether or not the task you are about to perform could be construed as a prohibited transaction, feel free to call one of our senior consultants for more information.


Do you have an Ask the Expert question? Email your questions to asktheexpert@guidantfinancial.com.