Investing in Land

Did you know that income from land purchased with a self-directed IRA flows back into that retirement account tax-deferred?

Buying land investments with your IRA diversifies your retirement portfolio and can offer better returns on investments. Land could be a great investment that offers better stability than other assets and has low maintenance costs.

Watch this short video on investing in land using a self-directed IRA

Raw Land
Farmland

FAQs on Land Investing in a Self-Directed IRA

Can I build on the land?

The IRA holder cannot use personal funds to build on land that is owned by their IRA, but they can use IRA funds for this purpose. When an IRA owns real estate, the IRA must pay ALL expenses including property taxes, HOA dues, and construction costs.

Can I live on or use the land?

No. The IRA holder and his/her family cannot use the land owned by the IRA. The land must be used for investment purposes only.

Can I sell the land?

Yes. The IRA can sell the land at any time, and all proceeds flow right into the IRA without any taxation.

Can I sell the land to myself when I want to use it?

You cannot buy property from your own IRA, but the land can be taken as a distribution once you are 59 ½ years old. The property is quit claim deeded into the IRA holder’s name, which is a taxable event. When the land is no longer owned by the IRA, the owner may use the land however they wish.

Can I sell the mineral rights to my land? Can my land be used for an Agriculture Preservation Program?

Yes. However, as the owner of the land, your IRA would be paid directly for the proceeds for such transactions. This is a tax-deferred transaction and is considered a dividend of the investment.

Who is listed on the deed?

The IRA will be the owner of the real estate and, therefore, is the entity listed on the deed. The IRA is required to pay any expenses related to the property and acquires any proceeds generated from the investment.

Can I work the land myself?

Unfortunately, the IRS prohibits disqualified persons from providing service to IRAs. Disqualified persons are the IRA holder, his or her spouse, ancestors, decedents, and any entity in which a disqualified person has an ownership of 50 percent or more.

What are the purchasing options? Do all funds need to come from the IRA?

IRAs can purchase in three ways. They can buy 100 percent of the property, they can partner with other individuals and/or IRAs, or they can use leveraging with non-recourse loans.

Find out if your land investment qualifies to be purchased using a self-directed IRA by filling out the form below. A Midland IRA representative will reach out to you shortly.