Q. I own an apartment building with some partners who want to sell. I'd like to buy them out with my IRA rollover and manage the property with my wife.

— W. Arakaki, Honolulu

A. Bad news: This doesn't seem to be allowed under Internal Revenue Service rules.

You can buy real estate through something called a self-directed IRA, but it appears you're proposing something the IRS would term a "prohibited transaction."

You can read up on this in IRS Publication 590, or discuss this with your financial adviser or attorney to be certain.

You'll want to pay attention to the IRS list of prohibited IRA actions. They include borrowing money from it, using it as security for a loan, buying property for personal use and selling property to it.

"The prohibited transaction rules say that you cannot exchange property between yourself and your IRA," said Beverly DeVeny, a technical consultant for an IRA newsletter, Ed Slott's IRA Advisor.

The IRS also bars you from receiving "unreasonable" compensation for managing the IRA. The prohibition also extends to family members.

The penalty for a prohibited transaction is generally more taxes. The IRS, according to Publication 590, won't consider your IRA an IRA anymore and the account will be treated as if the assets had been distributed to you.

If at that time you have a gain, you'll have to pay a levy.

But you shouldn't sour on the idea of owning real estate in an IRA; it's allowable under the IRS rules. DeVeny said investors need to set up a self-directed IRA account to do so.

Do you have a question about personal finance, taxes or other money matters? Reach Akamai Money columnist Greg Wiles at 525-8088 or gwiles@honoluluadvertiser.com