The Dos and Don'ts with Self-Directed IRAs

What Every Real Estate Investor MUST Know about Investing in Real Estate with a Self Directed IRA

1) Your IRA Cannot Purchase Property Owned by You or a Disqualified Person: “Can my IRA purchase a property that I own?” The answer is always no.

IRS regulations don't allow transactions that are considered "self-dealing," and they don't allow your self directed IRA to buy property from or sell property to any disqualified person, including yourself.

2) You Cannot Have “Indirect Benefits” from Property Owned by Your Self-Directed IRA: Can your self directed IRA purchase a vacation home for occasionally use? Can you rent office space for yourself in a building that your self directed IRA owns?

No. The purpose of the IRA is to provide for your retirement at some future date. It's not intended to benefit you (or any other disqualified person) today. If your IRA engages in a transaction that, in some way, benefits you or a disqualified person, this is considered an "indirect benefit."

3) Real Estate IRA Investments Are Uniquely Titled: You and your IRA are two separate entities. The investment needs to be titled in the name of your IRA—not in your personal name.

4) Real Estate in an IRA Can be Purchased without 100% Funding from Your IRA: You can purchase property in more ways than just an outright purchase of the full amount from your account. These other options include using undivided interest and partnering with others.