Let’s talk about how to use your IRA to buy real estate.
To me, one of the best kept secrets in this country is that you can actually use your IRA to invest in real estate.
Anyways, let’s talk about it.
I start out this post briefly explaining the business of private lending. After that, I’ll dive into the specifics of using an IRA to fund the purchase of real estate.
Speaking of private lending, here’s a quick video I did on how to safely make passive income as a private lender on real estate flips…
Let’s move forward.
Related: How to Make Money by Lending Money for Real Estate Flips
Note: This information presented in this article is for educational purposes only and should not be considered legal, investment, or tax advice.
Whenever you make an investment-related decision, make sure you consult tax, accounting, and legal professionals first.
I also recommend that you get acquainted with IRS Publication 590 after you’ve checked out this article. That way, you can get personally acquainted and comfortable with what you can or can’t do with your IRA.
Why Should You Use Your IRA to Buy Real Estate?
Real estate is a big-ticket item. A lot of people have more in their IRA than they do in their bank account.
Being able to use money from an IRA gives people that don’t have the liquid cash the ability to invest as if they did.
Not to mention the tax advantages involved with buying real estate using funds in an IRA.
Do You Have a Self-Directed IRA (SDIRA)?
If you have a regular IRA, and you want to invest in real estate, you need to move your money over to a self-directed IRA.
It’s called “self-directed”, because unlike normal IRA’s, YOU can direct what your money invests in.
Does it HAVE to be Self-Directed?
I’ve had a few people tell me that there are ways to invest in real estate with normal IRA accounts, but I don’t know if that’s true or not.
What I DO know, is that the people we’ve worked with have always used SDIRA’s to buy real estate.
If you want to look further into using normal IRA’s for real estate investing, be my guest.
I’ve always been under the impression that if you want to invest in anything other than certificates of deposit (CDs) and mutual funds, you have to move to an SDIRA.