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Should I Buy My House With My IRA?

By John Coktostin

It is possible to invest your IRA in real estate, but there are some things you should consider. The IRS does not allow investing your IRA in life insurance or collectibles such as art work, memorabilia or gems. Using your IRA to invest in real estate is possible, but not necessarily easily done.

First off, you need to create a self directed IRA. You also need to get an independent custodian for that IRA. There are trust companies, brokerages and other financial institutions that will do this, so check around.

Doing a web search for “self directed IRA custodians” can help you locate some. Check into their services and fees so you know exactly what you will be getting. Make sure to find out what their insurance coverage is – you want your assets to be protected!

Some of these custodians can also help you invest in other kinds of investments such as stocks and bonds and mutual funds. Make sure you know the rules for the investment. Make sure you know up front exactly what will be provided with their services.

A few custodians will go as far as collecting rent from the property. Others won’t. For these kinds of IRA investments it’s best to avoid any high maintenance properties.

There are some other rules to consider as well. You cannot invest in any property that will be used as your residence or vacation home. You also cannot buy, rent or lease from a spouse, parent or child.

For mortgaged property, most of your gains will still be taxable.You will probably lose any tax break advantages given to homeowners as well. Make sure to consult a tax professional about these matters.

When considering a real estate investment for your self directed IRA, remember to figure in the costs of property management and custodian fees. Also remember to figure in the tax changes. If you will soon need liquid assets, this plan may not be right for you. Look at all sides of this investment before jumping in.

NAFEP (The National Association of Financial and Estate Planning) is a leading provider of self directed IRA and self directed 401k products, administrative and custodial services.

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Article Citation
MLA Style Citation:
Coktostin, John "Should I Buy My House With My IRA?." Should I Buy My House With My IRA?. 12 Jul. 2010. uberarticles.com. 25 Sep 2014 <http://uberarticles.com/finance/investing/should-i-buy-my-house-with-my-ira/>.

APA Style Citation:
Coktostin, J (2010, July 12). Should I Buy My House With My IRA?. Retrieved September 25, 2014, from http://uberarticles.com/finance/investing/should-i-buy-my-house-with-my-ira/

Chicago Style Citation:
Coktostin, John "Should I Buy My House With My IRA?" uberarticles.com. http://uberarticles.com/finance/investing/should-i-buy-my-house-with-my-ira/


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