Use Your IRA to start a Rental Portfolio

Aug 20, 2018
Aug 20, 2018
Portfolio Tips

Can I Buy a Digital Rental with My Qualified Retirement Account?

With a self-directed IRA, your active investments can include real estate—rental properties included. Of course, you must follow some simple rules to qualify.

  • You must select a custodian that will hold your rental investment inside your IRA and release your funds to your title company.
  • You must have enough funds in your IRA already to pay the down payment—all of the down payment must come from your existing IRA funds.
  • If you don’t have enough funds, you can roll over funds into the IRA to cover the down payment.
  • The custodian must approve the purchase agreement.
  • You cannot write off depreciation as you could with other real estate investments.
  • You cannot use the investment until you retire.
  • You can’t live in the investment property or use the funds to pay off your home’s mortgage.
  • Your family or any company that you own at least half interest of, cannot share ownership of your rental property.
  • Repairs must be done by an outside company.
  • The custodian must approve every expense.

Not only will you have and investment that is generating income but your income from the property is tax-deferred. Contributions you make to your IRA are also tax-deductible up to a certain amount, so you can roll over whatever funds you need to make your down payment without getting hit by taxes.

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