Investing in real estate is a great way to grow your wealth, and now a great time to grow your portfolio. If you’re new to the rental property business, you’re most likely unaware of the option to use your retirement account for investing in real estate. Using your retirement account is not only a fantastic vehicle, but also a particularly powerful tool that many should take the time to learn about.

Traditionally, IRA owners are limited to investments like stocks, bonds, mutual funds and CDs; things that are easier to manage. With a Self-Directed IRA, however, it gives you the opportunity to diversify your investments more fully.

Using a Self-Directed IRA not only expands your portfolio, but it allows you to be comfortable with the assets you have. Additionally, with real estate purchased with a Self-Directed IRA, capital gains can be tax-deferred or tax-free, depending on the IRA. So, it’s a great tax shelter because the property’s income essentially goes into the IRA as an investment. You don’t have the same taxes and it’s a much better environment for investors, overall.

After you have set up your Self-Directed IRA account, you need to find a custodian who has vast knowledge on the subject. Generally, people rarely hear of Self-Directed IRAs because the typical custodians tend to be banks or brokerages. However, these institutions typically only offer stocks and mutual funds.

In order to invest in assets like real estate, you have to find a custodian that allows you to invest in an array of asset types. Once a qualified custodian is found, you must transfer your existing IRA(s) to them. After that, you’re free to find a property you are interested in. Keep in mind, however, that when you close on the property, you must have the custodian make the deposit and the purchase.

This is important because according to IRS rules, the transaction with your retirement plan must be made by a custodian. If the transaction is not made by the custodian, then the party involved is considered “disqualified” and the transaction is deemed “prohibited.”


According to the IRS, a disqualified party is:

  • The IRA owner or the spouse of the owner
  • The IRA owner’s lineal descendants and ascendants
  • An entity with combined ownership greater than 50 percent by a disqualified person(s)
  • A 10 percent owner, officer, director or highly compensated employee of such entity
  • A fiduciary of the IRA or person providing services to the IRA


With a changing market, now is a great time to research and consider investing in real estate with your IRA. With the right assistance, using a Self-Directed IRA to obtain real estate can be quite simple. 


Want to learn more about investing in Property – read some of our related blogs!


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