{"id":7548,"date":"2026-06-20T08:08:28","date_gmt":"2026-06-20T12:08:28","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=7548"},"modified":"2026-06-20T08:08:29","modified_gmt":"2026-06-20T12:08:29","slug":"whats-a-real-estate-ira-and-is-it-worth-having","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/whats-a-real-estate-ira-and-is-it-worth-having\/","title":{"rendered":"What\u2019s a Real Estate IRA (And Is It Worth Having)?"},"content":{"rendered":"\n
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Is a real estate IRA worthwhile? It\u2019s a question worth exploring. While we cannot give you investment advice, we can introduce you to the nuts and bolts of a real estate IRA. Then you can decide whether to continue pursuing the idea.<\/p>\n\n\n\n

Real estate is a solid asset. It can exist within an individual retirement account. And it can bring steady rental income into the account. Better still, income earned by the property stays within the IRA, so you won\u2019t be taxed on it during that time.<\/p>\n\n\n\n

Let\u2019s look at the process from the beginning.<\/p>\n\n\n\n\n\n\n\n

First Things First: Setting Up a Self-Directed IRA<\/h2>\n\n\n\n

To hold real estate using an IRA, an investor opens a self-directed IRA account. This takes a specialized broker to serve as custodian. Most popular brokerages won\u2019t allow real estate into individual retirement accounts.  <\/p>\n\n\n\n

The custodian will actively manage transactions involving the property. Your role will be limited, once you get the real estate into your account. This is because, legally speaking, you aren\u2019t the property owner. A separate entity from yourself\u2014your IRA\u2014holds the deed. The property title will name the trust company (the custodian), \u201cfor benefit of\u201d [your name\u2019s] retirement account number.<\/p>\n\n\n\n

This separation between you and whatever\u2019s in your IRA can be a benefit. Your real estate asset has protection through its status as retirement account property. This is why some investors with multiple rental properties might put at least one into a self-directed IRA.<\/p>\n\n\n\n

From now on, the custodian will manage deed transactions and agreements with third parties. The company will charge you fees for carrying out its administrative role. Expect to pay fees for money transfers, check requests, and other tasks. There\u2019s also a regular, yearly fee. These costs can cancel out a good deal of the revenue that comes into your IRA.<\/p>\n\n\n\n

Main Event: Buying Real Estate for the IRA<\/h2>\n\n\n\n

You\u2019re in control in the sense that you make the property selections. You may find properties through regular sellers, short sellers, sellers in pre-foreclosure, banks, etc. Your IRA funds will be payment for the property.<\/p>\n\n\n\n

Remember, you <\/em>are not the purchaser. So your purchase contract will show the buyer as the name of the custodian firm \u201cfor the benefit of\u201d your name and IRA account number.  <\/p>\n\n\n\n

You as the investor fund your IRA with enough money to cover the purchase. Normally these are cash deals.<\/p>\n\n\n\n

If, instead, you need to finance the purchase, speak with your tax pro to understand the consequences. Earnings from the property may count as taxable under certain IRS rules<\/a>.<\/p>\n\n\n\n

Advantages of Selling Real Estate From the IRA<\/h2>\n\n\n\n

At some point, you might decide to sell a property from the IRA. Here\u2019s how.<\/p>\n\n\n\n

First, you line up your buyer. You negotiate. When you and the buyer can agree on a deal, you ask the custodian to sell the property on behalf of your account.<\/p>\n\n\n\n

The advantage of this type of transaction? Proceeds go straight into your IRA. Any profits you might make on the sale will be tax-deferred. If it\u2019s a Roth IRA, they will be tax-free.<\/p>\n\n\n\n

Especially if the real estate selected for the IRA gains value quickly, having it in such an account can pay off handsomely.<\/p>\n\n\n\n

What\u2019s the Rule About No Self-Dealing?<\/h2>\n\n\n\n

IRS rules are strict on this. Basically, no self-dealing means:<\/p>\n\n\n\n