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Purchase Real Estate With An IRA

Real estate has become a popular nontraditional investment for IRA holders. It offers diversification and stands apart from traditional Wall Street investments.


Choose IRA Financial | Have questions about how to purchase real estate with an IRA? Call us today or submit your information so we can provide fast, efficient service.

Tips For Real Estate Investment

Use Self-Directed IRA LLC funds for the deposit and purchase of the investment property. You can also use funds from a non-disqualified third party. You cannot use use personal funds or funds from a “disqualified person.”

All expenses, including repairs and taxes that you incur in conjunction with your IRA investment property, should be paid using the retirement funds. You cannot use personal funds.

Services should never be performed by the IRA holder or any “disqualified persons.” The entire real estate purchase should be done by the Self-Directed IRA LLC.

With some properties, additional funds are needed for improvements. All of these funds should come from the Self-Directed IRA used to purchase the property.

To finance a IRA real estate transaction, only non-recourse financing should be used. A non-recourse loan is a loan that is not personally guaranteed and whereby the lender’s only recourse is against the property and not against the borrower.

Self-employed individuals and small business owners who are eligible for a Roth IRA would not be subject to IRS Code Section 514. This makes purchasing real estate easier and an exciting investment!

Why choose IRA Financial

IRA Financial will strive to be the best self-directed retirement & pension administrator in the country through a mixture of technology and amazing customer service.

We are genuinely interested in educating our customers and will not compromise our ethics, mission, and integrity in the name of profit.

real estate ira

real estate ira

Important details to remember

  • The title of the real estate purchased should be in the name of the Self-Directed IRA LLC. For example, if Joe Smith’s Self-Directed IRA LLC is named XYZ LLC, the title would be in the name of: XYZ LLC.
  • All income, gains or losses from the investment should be allocated to the IRA. Additionally, you cannot engage in any transactions involving the real estate purchased with your IRA that will benefit you or a “disqualified person.”

  • Keep good records of income and expenses generated by the real estate investment.

“Our experience has been great! My husband first heard of self-directed IRA so that we could invest in property instead of stocks, but it has taken years to find the information we needed and the expertise to help us make this transition. Every personal phone contact has been wonderful. We had to work quickly to be able to close a cash real estate contract and IRA Financial Group’s education in the rules applicable to IRA investments as well as an expedited formation of our LLC was exactly what we needed, when we needed it.”

Audrey Lanae Waldrup, FL

“I recently opened up a self-directed IRA with checkbook control using IRA Financial Group. What a pleasant experience and what a great process they have in place to walk your through all the steps. It was the perfect solution for making a real estate investment that is geared for a long term hold as rental property. All the rent goes into the IRA and all expenses are paid out of the IRA. This process will allow me to make anywhere between 8% to 10% growth each year. I could not be happier with my decision.”

Rodney Murray, FL

Wall Street Journal logo
“What about your IRA, including rollover IRA? You need to look at state law, advises tax attorney Adam Bergman of New York’s IRA Financial Group.”

CNN Money logo
“Adam Bergman…gets several calls a day from clients like McDermott looking to invest their retirement funds in real estate. ‘Our average client has retirement accounts of about $150,000 and is looking to buy one or two properties.’”

USA Today logo
“Jeff Brown…transferred roughly $50,000 from his workplace 401(k) to purchase homes to fix up and sell…He uses a self-directed IRA that he set up through IRA Financial Group in Miami Beach.”

Frequently Asked Questions

A Self-Directed IRA is a type of IRA structure that allows the IRA holder (you) to have more control over your retirement funds. There are essentially three types of Self-Directed IRAs:

  1. Those offered by financial institutions: With this type of Self-Directed IRA, the IRA holder is generally able to only make IRA investments offered by the financial institution which typically only includes financial relates investments, such as stock, mutual funds, and ETFs. Even though these types of IRA accounts are called “Self-Directed IRA” accounts that are very limited in their investment scope and do not allow IRA investors to make any non-traditional investments, such as real estate.
  2. Those controlled by custodians: Unlike a typical financial institution, most IRA custodians generate fees simply by opening and maintaining  accounts and do not offer any financial investment products or platforms. The funds are generally held with the IRA custodian who, at the IRA holder’s direction, invests the funds accordingly.
  3. Checkbook control: The IRA holder has total control over IRA funds and does not need to get investments approved by the custodian of the account. Instead, all decisions truly belong to the account holder. When the account holder finds an investment that they want to make, they can simply write a check or wire the funds straight from their Self-Directed IRA LLC bank account to make the investment.

In general, retirement funds are only protected against fraud or theft if they are deposited in an FDIC insured account. FDIC insurance covers all deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. If one makes a real estate investment or loans to a third-party and those funds are taken out of the FDIC insured account and invested, those funds are no longer granted FDIC insured protection and would not be protected against fraud.

IRA Financial Group is committed to helping our clients make safe and financial rewarding investments with their self-directed IRA accounts. While self-directed IRAs can be a safe way to invest retirement funds, investors should be mindful of potential fraudulent schemes.

A Self-Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. In fact. the IRS only describes the type of investments that are prohibited, which are very few.

The following are some of the more common of types of investments that can be made:

  • Residential or commercial real estate
  • Raw land
  • Foreclosure property
  • Mortgages
  • Mortgage pools
  • Deeds
  • Private loans
  • Tax liens
  • Private businesses
  • Limited Liability Companies and Limited Liability Partnerships
  • Private placements
  • Gold
  • Stocks, bonds, mutual funds
  • Most currencies

Yes. The mortgage would need to be a non-recourse type of loan. With a nonrecourse loan, if your IRA fails to make the payments, the only recourse the lender has is the property itself. Also, note that if your IRA obtains a loan, unrelated debt financing income tax (UDFI) will apply, which will subject the portion of the income or gains that are debt financed to Unrelated Business Taxable Income (UBTI). “Debt-financed property” refers to borrowing money to purchase the real estate (i.e., a leveraged asset that is held to produce income). In such cases, only the income attributable to the financed portion of the property is taxed; gain on the profit from the sale of the leveraged assets is also UDFI (unless the debt is paid off more than 12 months before the property is sold).

Yes. If your Self-Directed IRA LLC makes a property investment, all repairs, improvements, or renovations expenses associated with the property must be paid from the Self-Directed IRA LLC’s funds and the repairs and improvements should not be made by you or any other “disqualified person”.

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