IRA stands for Individual Retirement Account. A real estate IRA is defined by real estate investments owned within the retirement plan. It is not a unique or separate account type. Any IRA can be self-directed to invest in real estate. This strategy provides greater diversification and control.

Is an IRA real or personal property?

Your IRA owns the property—you don’t. In fact, the title to the property will read “XYZ Trust Company Custodian [for benefit of] (FBO) [Your Name] IRA.” If you buy real estate with your IRA improperly, you can disqualify the IRA. If that happens, all the funds in it immediately become taxable.

Can you put real estate in an IRA?

An IRA can be invested in real estate, private companies, hedge funds, separately managed accounts, mortgages, and a host of other assets. But you have to know the rules and other steps to take advantage of the full flexibility of the IRA. Many financial institutions and advisors will say that you cannot make these investments in an IRA.

Where does rental income go in an IRA?

If your property generates rental income, every bit of it goes right back into your IRA. Since you don’t own the property, you can’t pocket any of the income. On the bright side, none of the maintenance or other associated costs of owning real estate comes out of your pocket.

Do you need a custodian to buy a house with an IRA?

To buy and own property via your IRA you will still need a custodian, an entity specializing in self-directed accounts that will manage the transaction, associated paperwork, and financial reporting.

Where can I find a self directed IRA?

A true self-directed IRA allows you to purchase almost any legal investment asset. There are a small number of IRA custodians that offer self-directed IRAs. You can find them by going to any Internet search engine and typing in self-directed IRA. The major ones are listed in the box on the next page.