Top 10 Things to Know About Real Estate in an IRA in Any Economy

Real estate has a long history of holding its value during tough economic times. Of course, that depends on the property, its location, and the potential use. But for a large number of investors, real estate is a tangible asset that appreciates over time, always retains some value, and offers the opportunity for desired returns. For the same reason, a growing number of individuals use real estate in an IRA to build and protect retirement wealth.

The ability and potential to own a tangible asset such as gold or real estate in any economy is a valuable strategy. And, here’s how real estate in an IRA can work to help you grow and diversify your retirement portfolio.

What are Real Estate IRAs?Aerial photo of the sun shining down on a neighborhood of homes, surrounded by lush vegetation depicting different types of assets in real estate IRAs

Real estate IRAs allow you great latitude in using a variety of assets to build wealth for retirement. These plans are popular with beginner and sophisticated investors who appreciate the potential to earn income at a faster pace than they gain with stocks and bonds. And you don’t have to have tons of capital to invest in real estate in an IRA. Some assets are easily acquired with limited funds.

So, if you’ve ever considered investing in any type of property, explore the potential of real estate in an IRA.

Important Facts about Real Estate in an IRA

  1. Any type of self-directed account can invest in real estate:
  • Traditional, Roth, SEP and SIMPLE IRAs
  • Individual 401(k) plans
  • Health and education savings plans
  1. As the owner of the real estate IRA, you have the freedom and control to invest in what you know best instead of relying on a third party to make these decisions for you.
  2. Types of popular real estate assets include:
  1. Income—like from rent payments and even capital gains on the sale of the property—accrues in the account on a tax-free or tax-deferred basis.
  2. You can invest using a real estate IRA LLC. Also called single-member LLCs and checkbook IRAs, these structures give you checkbook control over your IRA funds. This is popular strategy is used by those who like to invest quickly to grab that perfect property before someone else does.
  3. All expenses incurred by real estate in an IRA must be paid with the IRA’s funds. Expenses include renovations on fixer-uppers, maintenance on rentals, fees for hiring a property manager, etc.
  4. You can partner your IRA with your personal funds. Your IRA can also partner funds with another person, entity, or IRA to acquire lucrative investment property. This makes it easy to invest with limited funds and also to share costs of any expenses incurred by the asset. Income is paid based on the percentage of ownership. Expenses are divvied up the same way.
  5. Your retirement plan can borrow funds to purchase rental property using a non-recourse loan. The loan is in the IRA’s name, and you cannot personally guarantee it.
  6. You are not allowed to receive personal benefits from the IRA (i.e., vacation in a rental property owned by your plan). Disqualified persons may not enjoy any benefits, either.
  7. Prohibited transactions and dealings with disqualified persons can cause penalties, taxation, and even disqualification of your tax-sheltered account. Details can be found by reading IRC 4975.

At the beginning of March, the Federal Reserve cut mortgage rates dramatically. According to, mortgage rates haven’t been this low in nearly 50 years. The opportunity behind this intent for Americans is to make it possible for many to buy homes or refinance their mortgages at more affordable rates in the current economy.

Low mortgage rates can also create an ideal environment to buy fixer-upper investment property and flip it for potentially decent returns. This is one of many strategies you can use with real estate in an IRA to build the retirement wealth you deserve.

For more information about real estate in an IRA, contact Advanta IRA. We are one of the nation’s leading administrators of self-retirement plans. Our client assets under management top $1.3 billion—and real estate is our specialty.

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About Scott Maurer

Scott is an attorney and a graduate of the University of Florida Law School. Scott started his career with Advanta IRA in 2006. His experience with various investment types and their unique processes makes him an invaluable asset. Scott holds the designation of Certified IRA Services Professional (CISP) and leads engaging seminars and webinars that educate the public on the intricacies of self-directed IRAs.