{"id":109136,"date":"2019-04-03T11:00:26","date_gmt":"2019-04-03T17:00:26","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=109136"},"modified":"2024-02-17T15:47:49","modified_gmt":"2024-02-17T22:47:49","slug":"invest-real-estate-roth-ira","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/invest-real-estate-roth-ira","title":{"rendered":"Invest in Real Estate Using Your Roth IRA"},"content":{"rendered":"\n

As an investor looking to build wealth and retire early, you\u2019ve likely considered taking advantage of a Roth IRA, a special type of retirement account that doesn\u2019t require you to pay taxes\u2014provided certain conditions are met, like a minimum age for withdrawal.<\/p>\n\n\n\n

In a Roth IRA, you can contribute up to $6,000 per year (in 2019) and use those funds to invest in assets like stocks and bonds.<\/p>\n\n\n\n

If you\u2019re reading this blog, you\u2019ve probably also considered investing in real estate as a way to build your wealth, whether through flipping properties, renting or leasing, or hanging on to real estate long-term with the hope its value increases over time.<\/p>\n\n\n\n

What you may not realize is it\u2019s possible to invest in real estate using funds allocated to your Roth IRA\u2014in other words, holding real estate within your Roth IRA. But is this a good idea?<\/p>\n\n\n\n

Self-Directed Roth IRAs<\/h2>\n\n\n\n

Traditional IRAs only allow you to buy and exchange conventional assets like stocks, bonds, ETFs, and mutual funds. However, you also have the option of pursuing a self-directed IRA<\/a>. These accounts have the same tax advantages as their traditional counterparts, but offer more flexibility with what you can buy and sell.<\/p>\n\n\n\n

For example, you can use the funds of a self-directed Roth IRA to hold partnerships, tax liens, single-family homes, multiplex homes, apartments, co-ops, condominiums, or even vacant land.<\/p>\n\n\n\n

The catch is, you\u2019ll need a \u201ccustodian\u201d (an individual or a service) to handle your account. Finding a custodian that specializes in self-directed IRAs can be tricky.<\/p>\n\n\n\n

The popular names you\u2019ve heard associated with Roth IRAs may not offer a self-directed option for the sake of keeping their business models simple and approachable. You\u2019ll need to find someone capable of understanding the ins and outs of real estate purchases, in addition to being a self-directed IRA custodian.<\/p>\n\n\n\n

Related: <\/strong><\/em>The 5 Best Investments in My Self-Directed IRA<\/a><\/em><\/p>\n\n\n\n

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Advantages of Roth IRAs<\/h3>\n\n\n\n

So, what are the advantages of using funds contributed to your Roth IRA to purchase real estate?<\/p>\n\n\n\n