Buying Real Estate with Your IRA

Published on July 29, 2013

When the housing bubble burst a couple of years ago many people saw the value of their home plummet; on top of falling home prices, lending standards became much stricter which made it harder for potential home buyers to obtain a loan. Since then, the economy has been slowly improving and recently the housing market has seen an upswing in housing prices and the number of houses being sold.

As reported in a New York times article, with the economy improving more people are feeling confident that they are able to afford a home. Although interest rates are still low they have increased slightly in the last several months along with home prices. One reason for the price increase is that fewer homes are going into foreclosure now than at the beginning of the Great Recession so there is less devaluation in the real estate market.

Buying real estate with your self-directed IRA can be a very wise investment decision. With home values and interest rates still relatively low it is still a buyer’s market. By purchasing an investment property now you could beat the market so that when interest rates and home prices increase even more you are not left wishing you had purchased sooner.

When you purchase real estate with self-directed IRA, all the income and expenses related to the property investment flow in and out of the self-directed account, and the administrator of your self-directed IRA handles all the transaction paperwork associated with it. As with some other types of nontraditional investments, there are some rules that you must follow regarding disqualified individuals and prohibited transactions.

For example, you cannot: