We all know the traditional tax-deferred IRA allows yearly contributions to a tax-deferred account using your pretax dollars. You are not taxed when you deposit into your IRA; you are, of course, taxed when you withdraw the money upon retirement.   A less well-known fact is that the creation of a self-directed IRA or IRA LLC enables you to choose what you would like to invest your money in, including real estate.

You can buy single family and multi-unit homes, apartment buildings,  condominiums, commercial property, improved or raw land with your IRA.  It must be a true self-directed  Roth or traditional IRA.  The loan must be non-recourse or it cannot qualify.  You then need to choose the property you want to buy in your IRA, and unfortunately, Internal Revenue Service regulations will not let you use the real estate owned by your IRA as your residence or vacation home. Nor can your business lease space in your IRA-held property. The underlying premise for any real estate investment purchased with IRA funds is that you can’t have any personal use or benefit of the property. To do so may cost you in taxes and penalties.   However, at 59.5 years or older, you can withdraw your real estate from your IRA to use it as a primary or second home without a penalty.  

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