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If my brother is not a disqualified party, can I buy a house and rent it to him?

Theoretically yes. Your brother is not a disqualified person. However just like the scenario mentioned above, if he occupied a rental property owned by your IRA and could not make the payments, you could run afoul of the exclusive benefit rule. This could cause your IRA to have participated in a prohibited transaction. It is important that you treat every investment the same – to benefit your IRA and only the IRA.