Yes, you can, as long as the property is used for investment purposes, only. The best deals to make are cash deals. In other words, you sell off some stocks to by a property outright. You might be able to hold a mortgage in the IRA trustee’s name, with the trustee making the necessary disbursements for principal and interest. Interest paid is one disadvantage. Holding a property for long-term investment in this way may not make you any money.Can You Use IRA Money to Buy Real Estate for Personal Use?No. In some cases, you may be able to take a one time disbursement without penalty to make a down payment on your first home. But, other than that, you cannot use IRA funds to pay for any real estate that will be used by you or your family members. Some people have made the mistake of using IRA money to buy real estate to be used as vacation property. Even though they rent the property to other vacationing families, they are not allowed to use the property for their own vacation, without risking the tax-free or tax deferred status of the rental income.How Do You Purchase Real Estate with IRA Money?You must first have a self-directed account. You find a property that you wish to purchase. You fill out the necessary forms and the account custodian makes the purchase in the name of the IRA trust fund. Any and all funds needed to repair or maintain the property must come out of the account. Any and all profits from rental income or reselling a property must be returned to the IRA trust.Do I Need a Custodian?In order to make real estate investments, you must have a self-directed account and you must have a custodian or trustee. The trustee is responsible for preparing the necessary tax documents and insuring that the investments you make are allowed by the IRS. If you want to use IRA money to buy it, you should use extra care when choosing a custodian or brokerage. Most are not familiar with the tax laws and other regulations concerning real estate investments.How Do I Choose a Custodian?If you want to use IRA money to buy real estate, you should choose a custodian that is familiar with all of the relevant rules and regulations. They should have been in business for a number of years, in order to insure that they have the experience necessary to conduct transactions on your behalf without risking your tax benefits. Equity Trust is a good choice.How Do I Choose the Right Property?This is asked even more often that can you use IRA money to buy real estate. Finding the right property takes time and effort. It also takes some skill, which only comes with experience. If you are new to real estate investing, you should probably contact an investor. If you know someone, that’s great, give them a call.If not, there are a few investors that are willing to take practically anyone by the hand and show them the way. They make it “easy” for you to use your IRA money to buy real estate and they increase the likelihood that your returns will be significantly better than what you could get with traditional investments. In other words, you can grow your nest egg faster than you ever thought was possible.
Buying real estate with Roth IRA funds is fairly simple and a good idea for several reasons. With a roll over IRA buying real estate is also possible and can be a good way to diversify your portfolio. In both cases the first thing that you will need is a self-directed account and the right trustee.Many of you may be accustomed to having someone else make your investments for you; a brokerage, your trustee or account custodian. While that is the simplest way to grow your retirement account (and maybe the safest, depending on your investment knowledge), there are only so many types of investments that can be made on your behalf, typically, stocks, mutual funds, certificates of deposit or bonds.With a self directed account, you have more investment options. With certain trustees, you have even more options. There are only a few types of investments that are prohibited by law. Investing in life insurance is one. Buying real estate with Roth IRA or traditional IRA funds is allowed, but most brokerages do not offer their clients that option.In a roll over IRA buying real estate is also allowed. You just have to follow the rules. The rules are the same regardless of what type of IRA, you have. Usually if you have a roll-over IRA, it means that your funds were originally in another type of account, a 401-K for example. Once you have transferred the funds from one account to another, the fact that it is a roll over account is irrelevant, when it comes to rules and regulations regarding investments.The regulations that apply to buying real estate with Roth IRA or traditional self-directed retirement accounts are fairly simple and straight forward. You cannot buy houses or land for your own personal use. Neither you, nor your family members can live in a house that is deeded to your IRA. Real estate deals must be made for investment purposes only and can only be of benefit to your retirement account.Any funds that are needed for repairs, upgrades, remodeling or general maintenance must come out of the IRA and any profits (rental or resell income) must go back into the account. You must avoid making any purchase that could be considered “self-dealing”. A knowledgeable (and honest) custodian can fill you in on the legal details and complete information about buying real estate with Roth IRA funds.If you are just about to transfer funds into a roll over IRA buying real estate with the account will only be possible if you a)get a self-directed account and b)find a trustee or brokerage that offers you that option. The Equity Trust Company is a good choice for a self directed IRA custodian. Now remember that they can only do what you ask them to do and insure that your transactions are legal. They cannot help you find the right deals. That is up to you.If you are not an experienced investor, you can still profit from buying real estate with Roth IRA funds, if you get the right help. There are a small number of experienced real estate investors that are willing to help people grow their retirement wealth. It’s always a good idea to ask for help.