Use Your IRA to start a Rental Portfolio
Aug 20, 2018
Aug 20, 2018
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.