Buying Investment Property

Self-directed retirement plans are allowed to hold many different types of real estate as assets. Residential and commercial real estate are two popular investment property types that investors choose to invest in using their retirement account. Common residential properties include single and multi-family homes, condos, townhomes and offshore property. Popular commercial real estate options include apartment complexes, offices and retail buildings.

How it Works

Profits are deposited into the retirement account tax-free. This includes rental income and proceeds from the sale of the property.

All expenses must be paid with funds from the retirement plan including HOA fees, repairs and the property tax bill.

You are able to partner your IRA’s funds with personal funds, or with another person or IRA to purchase the investment property. All income and expenses would be split according to percent ownership.

If the IRA does not have enough funds to purchase the entire property a non-recourse loan can be acquired to help finance the purchase. UBIT and/or UDFI tax may be applicable.

Repairs, maintenance, and property management must be performed by third parties and paid for using IRA funds.

You cannot rent to, sell to, or purchase a property from any disqualified persons . Also, you may not purchase a property using your IRA that you already own personally. Read about deferring capital gains using a 1031 exchange for investment property you own personally.

You can never use the IRA property personally. It is for investment use only.

All investment decisions are made by the IRA owner as Midland IRA does not recommend or endorse any investments. This includes doing your own due diligence on the investment property.

If you are interested in learning more, contact Midland IRA. We can explain the details and help you get started investing in investment real estate today.