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Self-Directed IRA Real Estate Rules: Using IRA to Buy a House

12 December, 2017

Self-Directed IRA Real Estate Rules: Using IRA to Buy a House

Ongoing stock market volatility has encouraged many investors to seek out alternative methods of saving enough money for retirement, which includes understanding Self-Directed IRA real estate rules that govern using IRA to buy a house. Let us show you the advantages of buying real estate with an IRA account and explain how easy the process really is!

Understanding Self-Directed IRA Services 

This type of IRA account is still generally lesser known than the traditional IRA and Roth IRA, because no investment advisor who specializes in stocks and mutual funds is ever going to suggest that you take over full control of your retirement account and buy real estate, which pays him or her zero commission! To open one, you must hire a trustee (IRA custodian) who will be responsible for administering the account, filing all necessary documents with the IRS and will permit you to hold an alternative investment like real estate in the account. 

Just like any other IRA account, the owner can invest in stocks, bonds and mutual funds, but they can also invest in things that major investment houses like Fidelity or Vanguard don’t offer, which includes buying real estate in the form of small businesses, boat slips, storage units, parking lots, land and vacation homes.

“Real estate can be a good long-term investment and generate higher returns than the stock market”, wrote Fox Business News.

Understanding Self-Directed IRA Services

Also Read:

Why a Self-Directed IRA is Better Than a 401(k)

Yes, a Vacation Home Can Also Be an Income Producing Property! 

Getting Your Money’s Worth in a Tulum Real Estate Investment 

Keep in mind that it takes time to open a Self-Directed IRA account, since rollovers will be required and the down payment for buying real estate must come from IRA funds. Also, you are not permitted to take advantage of IRA investments until you retire, so you won’t be able to use the money to pay off an outside mortgage, or live in the property. You’re buying it because the property is income producing, or is expected to appreciate in value, or both.

Benefits of Buying Real Estate With an IRA 

  • Appreciation: Investment Properties Offer Low Risk
  • Offers Hedge Against Inflation
  • Return on Investment: Beats the Stock Market Over Time
  • Secure Investment: Property is a Tangible Asset
  • Tax-Deferred Rental Income & Capital Gains

Benefits of Buying Real Estate With an IRA

All expenses, maintenance, taxes due and insurance on the property must also be paid directly from the IRA account. For example, if you own a vacation home rental with association dues or golf club membership fees associated with ownership of the property, those must also be withdrawn from the IRA. For this reason, we always recommend working with a reputable property management company to help with administration and handling of any day-to-day duties associated with managing or renting the property.

Are you happy with your IRA’s performance over the last 10 years? Let us know in the comments!

Would you like to know more about how to invest in real estate using an IRA account? Click the link below and discover why buying real estate with an IRA in an ideal location can diversify your portfolio and provide a hassle-free revenue stream to dramatically improve your ROI!

Want to Know How to Invest in Real Estate with your Self-Directed IRA?

Topics: Investment IRA Alternative Investments Learn How