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What Should Everyone Know About Self-Directed IRA Real Estate Purchases

Self Directed IRA Real Estate

Are you looking into a self-directed IRA real estate purchase? Unlike traditional IRAs, self-directed account holders may invest in real estate. These investments have given many people a powerful combination of income and appreciation. Purchasing real estate with a self-directed IRA is popular for that reason.

This company hosts seminars and educational events to educate people on self-directed IRAs. With a self-directed IRA, you have the freedom to invest in alternative assets. People can get single-family homes, multi-family homes, apartment buildings, and condominiums. If you want to buy unimproved land or commercial property, that is also a possibility.

Financing a Purchase With Your Self-Directed IRA

Even if you do not have enough money for the entire transaction, you may be able to finance it. You can often leverage any income produced by the property. When you take out a loan to finance the structure, it is used as collateral for the loan. Since the property belongs to the IRA, debts must be paid from its holdings. These sources can be property income, permissible contributions, or other assets.

The type of loan this would be is a non-recourse loan. The account holder may not give a personal guarantee on the property. Therefore, there cannot be any personal recourse against you. The loans are held by the retirement plan, and that is all that is at stake here.

If you get a property loan to hold inside the IRA, you may incur special taxes. The unrelated business income tax may accrue, and you must pay by year’s end.