Question:
“Hi Gary. Do you know if you’re allowed to buy real estate in your IRA?”
Answer:
Yes, we’ve helped clients do it and I’ve even done it myself a few times.
You must have a self-directed retirement account with a company (aka “custodian”) that allows real estate IRAs.
And you must follow the rules, including:
- You or your business cannot occupy the property.
- Your IRA cannot buy a property from you, your spouse, or certain family members.
- You cannot sell the property to yourself, your spouse, or certain family members.
- You can finance the property, but it must be “non-recourse,” meaning that the property is sole security and the lender cannot go after the IRA for any loss.
- All income and expenses from the property flow into and out of your IRA, not you personally. (I.e. You can’t pay the bills from your personal account or receive the income.)
There are additional rules, so please consult your tax professional for more info. (By the way, if your tax pro says you can’t buy real estate in your IRA, tell them to check again. Or go find another tax pro.)
If you’re interested in investing with your IRA, call me at (858)457-KENT.
