Real Estate IRAs

Real estate is the most popular investment in a self directed IRA.

A Real Estate IRA with Midland Trust is extremely easy to set up and invest. Real estate investors are smart and understand the benefits of tax-free investing. All income and gains inside a self directed account grow tax-free. You have the freedom to invest in raw land, rental property, commercial property, mortgage notes, tax liens, and more! Invest in real estate with your IRA to diversify your investment portfolio and build tax-advantaged retirement wealth. Download our Real Estate IRA Guide today.

Investors find real estate attractive because it is relatively easy to navigate and secured by physical property. Midland helps clients maximize the wealth-building potential of self directed retirement accounts.

Midland provides premier educational programs and outstanding, personal client service. Midland frequently hosts webinars and posts new content regarding real estate investing within an IRA. Visit our event calendar for upcoming dates. Or, visit our blog to read articles about real estate IRA investments.

Real Estate IRA Guide cover

Learn about the tax benefits of using an IRA to invest in real estate. Our Guide covers the rules, benefits, and how-tos of Real Estate IRAs.

Real Estate in an IRA

View case studies in which Midland clients invested in real estate. Get an idea of what you can accomplish in your retirement account with real estate investments.

Buying Investment Property In Your IRA

Self directed retirement plans can hold a variety of real estate. Residential and commercial properties are popular choices made by IRA investors. Residential properties include single and multi-family homes, condos, townhomes, and offshore property. Commercial real estate options include apartment complexes, condominiums, offices, and retail buildings.

Owning Rental Property in Your IRA

Account holders can own rental properties such as single-family and multi-family homes, commercial properties, townhomes, and condominiums. Rent collected from these properties flows back to the IRA tax-deferred (or tax-free if it is a Roth IRA). The account holder can decide when to sell the property. The proceeds from closing would also go right back into the IRA, deferring taxation.

Owning Fix and Flip Property in Your IRA

Account holders can also use their IRA to buy real estate with the intent to resell. If the fix and flip real estate investment method interests you, buying and selling those properties within an IRA will provide you additional tax advantages. When you purchase a property in an IRA, you can have a non-disqualified third party(ies) improve that property. When you are ready to sell the property, the sale earnings grow tax-deferred (or tax-free if it is a Roth IRA) in your IRA account.

Buying Land In Your IRA

Did you know that income from land purchased with a self directed IRA flows back into that retirement account tax-deferred or tax-free depending on the account type?

Land investments diversify your retirement portfolio and may offer a better return on investment. Land could be an excellent investment that provides better stability than other real estate and has low maintenance costs.

Watch this video to learn more about investing in land with an IRA.

Types of Land Investments

Raw Land Investments

  • Long-Term Holdings
    Your IRA purchases the land, and you can resell when property values increase, providing a good return. There is the potential for economic growth, urban sprawl, or large corporations to build nearby. Any of these would increase the land’s value.
  • Speculative Holdings
    Your IRA hopes to receive the same gains as with long-term holdings. However, these gains happen in a much shorter timespan. As with long-term options, these holdings require minimal effort. The cost of maintenance or upkeep is low.
  • Development and Subdivision Potential
    These investments can be tricky but lucrative if the timing of the purchase and potential returns align with the stars. As this category indicates, land can sell in parcels rather than one giant tract. Savvy investors might be able to obtain significant returns using IRA funds to invest in land.

Farmland Investments

Farmland is generally considered a viable investment vehicle. It’s potentially a fixed resource that provides the means to grow and harvest crops, raise cattle, chickens, and other critical food sources. The risk in these investments can be minimal and provides stable returns. Farmland investments offer a hedge against inflation and stock market assets.

Land Investment FAQs

Can I build on the land?

Can I live on or use the land?

Can I sell the land?

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

Can I sell the mineral rights to my land? Can my land be used for an agriculture preservation program?

Who is listed on the deed?

Can I work the land myself?

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

Steps to Buy Property In Your IRA

    Open a Midland Account

    Fill out Midland’s account application. Application documents can be found on our website or you can contact us and we will send you the paperwork.

    Fund the Account

    Transfer funds from an existing IRA or rollover funds from a former employer plan. If you are eligible, you can also make an annual contribution to your IRA.

    Make a real estate purchase offer

    All purchase contracts must list your IRA as the owner (Midland Trust Company as Custodian FBO Client Name, Client Account #).

    Close on the property purchase

    Close On the Property Purchase. Close on the investment property using your IRA funds. Midland will work with your title company or attorney. You’re done!

Real Estate IRA Investment Benefits

  • Profits deposit into the retirement account tax-free. Profits include rental income and proceeds from the sale of the property.
  • You can partner your IRA’s funds with personal funds. You may also partner with another person or IRA to purchase the investment property. All income and expenses are split according to percentage of 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.
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Midland Pay Makes Rent Payments Easy!

Midland Pay is Midland Trust’s Payment Portal app. It allows tenants of Midland account holders to quickly and easily pay rent securely via direct deposit (ACH) at no additional cost to you or your tenants.

Midland Pay Features Include:

  • Send rent payments via ACH
  • Pay as a guest
  • Create an account to send future rent payments
  • Send a one-time rent payment
  • Schedule recurring rent payments
  • View payment history
  • Easily search for the note to be paid
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Real Estate Investment Rules

  1. There are Disqualified Parties to the IRA account. The IRA holder, spouse, lineal ascendants, and lineal descendants are Disqualified Parties. Entities in which the previously mentioned own 50% or more are also Disqualified Parties.
    1. You cannot buy, sell, or lease a property to any Disqualified Party.
    2. The property is for investment purposes only. There can be no personal use of the property.
  2. The IRA must be the property's purchaser. List the IRA vesting as "Midland Trust Company As Custodian FBO Client Name, Client Account #" on the contract and all closing documentation.
  3. If the contract is in your name, a new contract will need to be drafted to list the IRA vesting. No assignments or amendments to contracts are accepted.
  4. The IRA account must pay Earnest Money. If Earnest Money is required, you will need to send the IRA vested contract to Midland to have funds issued.
  5. Midland will sign all documents on behalf of the IRA once the client initials as read and approved.

  1. The IRA account must pay all related expenses. Your IRA cannot reimburse you for any payments made personally. Some examples of qualified expenses for an IRA owned property include utilities, repairs, improvements, HOA dues, taxes, insurance, and appliances included in a Lease Agreement.
  2. The IRA must receive all income from the property. Make rental checks payable to your Midland IRA account, not to the account holder.
  3. A non-disqualified third party must complete improvements to the property. You cannot make improvements yourself.
    All Lease Agreements must list your IRA account as the Lessor. You can sign the Lease personally and send a copy to Midland for your records.
  4. If you elect to have a property manager, it should be a non-disqualified third party. The property manager can collect rent and pay any related expenses from the rental income. The remaining funds should be sent back to the IRA.