Buying Real Estate with a Self-Directed IRA 

Buying Real Estate with a Self-Directed IRA 

Need a plan administrator or trustee to process your requests 

May purchase real estate, mortgages and other real estate related assets 

Traditional IRAs and 401-K plans are fine 

You identify and control the investments-the administrator acts on your orders 

The administrator can not recommend purchases 

All of the income and expenses are for the benefit of the account. This includes all property rental or lease income, taxes, property management and repairs. 

Invoices for expenses are paid on client approval. The record-keeping and administration expenses may be paid either directly from separate funds or through the Plan, and may be tax deductible. 

You may purchase property with both IRA money and regular taxable money 

TYPES OF PROPERTY YOUR IRA CAN OWN 

Single family and multi-unit homes, apartment buildings, co-ops, condominiums, commercial property, improved or unimproved land, whether it's leveraged or unleveraged, may be purchased by your Qualified Plan or your IRA. 

PURCHASING AND SELLING REAL PROPERTY 

A real property purchase or sale is initiated by executing either a Buy or Sell Direction Letter For Real Estate. 

Real property may be bought at auction for your Plan, but you cannot purchase with personal funds and later be reimbursed.  

FINANCING THE PURCHASE 

You may finance or leverage any property you purchase for your Plan. The property is the collateral for the loan. As the property is an asset of the Plan, repayment of the underlying debt must come from contributions to or income from the property or other assets in the Plan. 

ENSURING THE TAX-DEFERRED STATUS OF THE ACCOUNT 

The entire transaction must flow through the tax-free or tax-deferred retirement account. The escrow must be opened by the account, and not in the name of the beneficial owner. Vesting is always in the name of the account. Only Qualified Plan or IRA funds may be used as good faith deposits, down payments, or purchase money. 

If title is vested in individual account holder names, it may not be subsequently sold to the tax-deferred or tax-free account.  

BUYING OR SELLING FRACTIONAL INTERESTS IN PROPERTY 

While fractional interests in real property may be purchased or sold, such interests may not be bought from the beneficial owner of the Plan or IRA or members of their family or business, except siblings.  

ADDITIONAL REQUIREMENTS 

When purchased, these properties become assets of your Plan or account. In addition: 

• You may not personally own property which you intend to purchase with Plan funds and you must ensure that your intended purchase is not a prohibited transaction
• It must be for investment purposes only
• Neither you, your spouse, nor your family members (other than siblings) may have owned the property prior to its purchase by your Plan
• Neither you nor your family members (other than siblings) may live in or lease the property while it's in your Plan
• Your business may not lease or be located in or on any part of the property while it's in your Plan
• You may receive any property as a distribution from your Plan as a retirement benefit