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It was my understanding that any real estate that goes into a 401k could not have a mortgage. Could you go into this a little? cannot mix money from outside an IRA with money in an IRA...And an IRA can invest in mutual funds or partnerships.

So, would it be possible to have a limited partnership (the assets of which include a home or vacation property with or with out a mortgage) where shares of the limited partnership are purchased by the IRA? Is partial ownership of the LP where those funds origonated outside an IRA prohibited? Do you see where I am going with this?

Could I form a limited partnership with my brother. I put in 45k in cash, my brother puts up 45k in cash we are now each 50% owners. The IRA purchases 1/3 of the corporation for $30k. (or we could also only put 30k each in and then just have the shares diluted) The corporation then purchases a 350k home with 35k down along with 15k closing costs. At this point would we be prohibited from using the property? Eventually the LP would buy the shares back from the IRA.

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