Ever wanted to buy your retirement home at today's prices but all your capital is tied up in your IRA? It is entirely possible to purchase property in your IRA if you follow some very specific rules and hire the right folks.

 

IRA Purchases

Purchasing your retirement home in your IRA is completely possible, but the rules are fairly strict, both in the purchase transaction and in how the property is used once your IRA is the titled owner. 

 

Purchasing property in your IRA starts with a self-directed IRA. Your typical Fund Manager will not be able to perform this function for you. You can transfer out eligible funds to a self directed IRA or transfer a legacy account from a previous employer. IMPORTANT THINGS TO CONSIDER when you purchase in your IRA. 1) down payment must come from the IRA, 2) you can not use the property yourself until it is distributed as an asset in retirement*, 3) all income from the property must be paid to the IRA like income from a mutual fund invested in by your IRA. 

 

*The IRS makes the rules on the use of the property. You, your children, parents and spouse may NOT use the property in any way. These are considered your family members. The IRS does not consider your brothers, sisters, aunts, uncles or cousins family and can use the property. The main caveat of all IRA purchases is that the IRS treats your IRA as a beneficiary - an individual that you owe a duty to care for and protect. Failure to follow the laws can result in dis-allowal of the investment, a demand for tax payment for early withdrawal, or other significant consequences. All Montana has a list of self directed IRA companies to get you started. 

 

For more information on this out of the box approach to buying investment property, contact us. If you don't already have a self directed IRA, we have lists of IRA companies to make your selection from.