Types of Real Estate Investments in an IRA

The most popular asset in a self-directed IRA is real estate. Commonly referred to as real estate IRAs, these retirement plans can invest in many different types of real estate and related assets.

Some examples include:

  • Single and multi-family homes
  • Mortgage notes
  • Commercial property
  • Rental property
  • Apartments and condominiums
  • Rehab-and-flips
  • Real estate owned (REO) properties—foreclosures
  • Improved and unimproved land
  • Offshore property
  • Building bonds and commercial paper
  • Tax liens and deeds
  • Tangible asset and trust deeds

Whether you are purchasing rentals, rehabs, or commercial property you must understand the property is to be used to build retirement income. You are unable to enjoy any personal benefits the property may offer. For instance, you are unable to vacation in a rental property or to live in a house your IRA owns. This rule applies to disqualified persons, as well, and is considered a prohibited transaction that can cause your self-directed IRA to suffer heavy penalties or even lose its tax-advantaged status.

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Best Practices of Investing in Real Estate with an IRA