I received this email from an investor of mine who invest through his self directed IRA, now he is sending my attorney emails asking her to change escrow
demands already submitted to the loan officer to not charge the interest on the loan but recategorize it as profits in the property so that the gain hits his self directed ira and there is no tax. When we funded this loan I had forgotten that his self directed ira was the owner of the loan, and afterwards I learned that the act of his giving me a loan to rehab a property that is ira already owned a 30% interest in is an act of self dealing. What do I do now to keep out of trouble and not mess up this sale for the buyer
---------- Forwarded message ----------
Date: Oct 14, 2015 9:06 PM
Subject: RE: XXXXXXXXX Closing
Good Evening XXXXXXXX,
I just spoke with XXXXXXXXXXX and we see the wisdom in an arrangement different than what we originally proposed, however from the perspective of the actual cash amount invested by the parties we believe a more equitable arrangement would be to disburse the original loan amount of $200,001 to XXXXXXXXXXXX excluding any interest and points that are due. The original loan amount included approximately $37,000 for repairs. Using our $37,000 and allowing for another $37,000 of additional cash investment by Crimson we come up with a total to be distributed of $237,001. Crimson would receive all and likely more than was actually invested and we would receive our original investment.
Seems pretty straight forward and simple to write up escrow instructions to meet those terms and then we can use the next few days to work through the details for final disbursement. An additional benefit is that Crimson Investment Group would not incur the additional interest expenses on the original loan amount.
Look forward to seeing your escrow instructions in the morning.