Can I hold real estate in an IRA?

The form of IRA account that most of us are familiar with, the type offered by banks, brokerage and mutual fund firms, allows for the purchase of individual stocks, bonds, certificates of deposit and or mutual funds.  There is, however, also the option of a self directed IRA which allows for holding other investments such as real estate, precious metals, deeds of trust, mortgage notes, commercial paper and even small businesses. Three critical partners to identify in implementing a plan to purchase real estate within a retirement account are a custodian / trustee offering self directed accounts,  a lender, assuming that you wish to make a leveraged purchase, that offers what is termed non – recourse financing and a real estate agent that can assist you in identifying appropriate properties.  Owning real estate in an IRA can be very rewarding however there are more than a few caveats and limitations to consider.  First and foremost is that generally speaking you, or anyone in your immediate family,  can not derive direct benefit from ownership of the real estate until such time as it is dispersed from the IRA.  No buying a condominium in San Diego that you enjoy for two months in the winter while renting it out for the rest of the year.  No paying yourself a fee to manage the day to day business activities of an apartment building held within your IRA. In addition there is no depreciation benefit available as you might have on property held outside of an IRA.  On the other hand, and most importantly, all current income, as well as any capital gains realized, can be differed until retirement when potentially you will be in a lower tax bracket.  If the thought of expanding your retirement investing horizons is interesting to you please visit with your tax accountant and then give us a call.  We can refer you to an appropriate custodian / trustee and, of course, assist you in identifying real estate options that fits you requirements.

Remember whether buying or selling, moving up or downsizing, Lincoln or Omaha, the Vaccaros; Paul & Susan, stand ready to assist you, your family, friends and co-workers. Call or email us today! Lincoln (402)817-0355 , Omaha (402)577-0820, (Paul & Susan Vaccaro – CBSHome Real Estate 15950 W Dodge Road, Suite 200, Omaha, NE 68118 – Woods Bros Realty 3737 S 27th Street, Licoln, NE 68502.

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