Make Money in Real Estate –
Use Your IRA Money to Buy Real Estate

There has been a lot of money made in real estate during the past 10 years when investors used their IRA to fund their deals.  Unfortunantly for many ‘regular’ stock investors they’ve been sitting on ‘cash’ for the last years waiting for the stock market to come back while they could have been making real money in real estate using their IRA (or other retirement accounts) funds.

Here’s How:

There are 2 main types of IRAs. The traditional IRA where the contribution to your IRA is not taxed but when you take the money out after retirement the money is taxed at that time.  The taxes are just deferred to a later date.

The 2nd type of IRA is the ROTH IRA.  Your contribution to the ROTH is taxable before you put it into the IRA but there is no tax when you take it out.  Thus you do not pay any tax on the growth of the IRA money.  It amounts to a tax-free investment.

With either one, you can still invest in non-stock investments and you can still make money in real estate.

There are a lot of pros and cons about investing your IRA funds into real estate deals.  First of all you have to know some basics about the restrictions on the use of IRA investments. This strategy may or may not be right for you.

Some of the restrictions include selling your own real estate or personal property to your IRA, buying anything from your IRA, your company buying something from your IRA, using the IRA as security for a loan, buying from or selling to or working with a disqualified person (anyone who can influence or benefit from the deal) and certain family members and many more restrictions. Do any of these forbidden transactions and you’ll be on the fast track to NOT making money with any kind of real estate.

When it comes to making money in real estate using your IRAs…With every transaction you have to be very careful to follow the rules.  Some of those rules can be found in the IRS code section 4975. Other government agencies, including the department of labor also have rules relating to retirement accounts.  Consult with your real estate and tax attorney before you invest your IRA.

Some of the transactions that IRA money may be used for are;

  • Purchase self-storage business
  • Loan to other REI deals
  • Purchase loans, notes, mortgages
  • Buy property using a Qualified  Personal Residence Trust (QPRT)
  • Use a Grantor Retained Annuity Trust
  • Buy Tax Liens on property
  • Lease or purchase commercial or residential property
  • Purchase single family homes, condos
  • Buy mobile home park business
  • Invest in a shopping center
  • Be part investor in a building complex
  • Own and rent billboards
  • Use funds for factoring
  • Buy land with timber rights, land having a good timber stand already established
  • Purchase bad debt from places like Visa, MC, banks
  • Purchase oil, gas  or water rights
  • Invest in options on commercial business, commercial property, residential property
  • Own an LLC in your IRA

There are stiff fines when you use your own IRA money (or the properties you purchase with your IRA money)  for personal use.  There are not a lot of restrictions about what type of investment you can use your IRA money for.
But the restrictions come into place in the “who, what, when” and how they are connected with the transactions.

Example; You may not invest with your parents but you may invest with your sister except, if she has any influence over your decisions, or if you may get any other personal benefit from because of the investment, or if she works with you any other business, and on and on. It is important that you know who is a “disqualified person” as defined in the IRS code 4975.

When you get all the prohibited transaction and disqualified persons straight in your head, then investing with your Roth or Traditional IRA can be very lucrative. It’s one of the best ways to make money in real estate, hey…You may be able to live a tax-free life style.

As with any government related regulation, there will be changes in the laws. You need to get all the information you can even before you go to your real estate and tax attorney.

It would also be a very good idea for you to read the actual law.  I am not trying to make you an attorney but it is up to you to abide by the law.

You need some understanding of the restrictions about making money in real estate using your IRA.  Be prepared so you can ask the right questions.

We cover this topic regularly through various articles and blog posts, subscribe to this blog in the right column and you’ll be set to receive new information, tools and tips as rules and regulations change. See subscribe in the right column.

Also, there are allot of changes to the current tax codes that affect the Real Estate Business in big ways. See New Tax Changes 4 Investors Here.

Remember, There are a lot of good ways to make money in real estate. Commercial Real Estate investing is one of them, and one of the easiest ways to both finance your purchases and build your retirement accounts is to be your own bank using your own IRA funds to purchase your real estate deals.

Good Luck

Norm Reid

Post to Twitter

14 Responses to “Make Money in Real Estate Use Your IRA”

  • Hettie Soulia:

    I am really thankful to this topic because it really gives great information “~*

    • Mike Talco:

      sounds interesting ??!!

      • Ivy:

        Contributions to a Roth IRA are limited to 100% of neread income (wages, net self-employment, etc.) or $5,000 ($6,000 if you’re age 50 or older), whichever is less.A SEP-IRA is an employER funded plan. So if you’re a salaried employee, your company would make the contribution, if any.You can also fund a SEP if you’re self-employed. Contributions for 2008 max out roughly at about 20% of net self-employment income (after a 1/2 of self-employment tax adjustment) or about 49k, whichever is less. Hope that helps. Disclaimer. The information in this response is for general purposes only, and shall not be construed as specific tax, legal, or investment advice for any individual. The questioner is urged to contact their own professional advisors before implementing any tax or investment strategy.

  • Wyatt:

    An interesting discussion may be valued at
    comment. Im sure someone to only write read more
    about this topic, it will not be a taboo subject but in most cases individuals have been not enough to communicate
    on such topics. To another location. Cheers
    My website – reverse phone lookup

  • Bruce:

    I think it had been one of the best paid jobs but totally requires a lot of hard work to get by things. I never imagined myself doing it quite those in the field would.

    Bruce Alford

  • Jorge Cintron:

    When we are in a strong bull market, and it seems like the market will not go down no matter what, you can get a great stock investing tip just from throwing a dart at the list of stocks in Investors Business Daily, and come out with a winner.An Investing Tip can come from an article you read in the newspaper or a magazine. Usually the time you read about it, the stock has already made it’s big move. That is when the smart money starts taking their profits and sells to the dump money…

    Please do go and visit our own homepage

  • Deloris:

    Excellent pieces. Keep posting such kind of info on your site.
    Im really impressed by your site.
    Hello there, You’ve performed an excellent job. I’ll certainly digg it and in my view suggest to my
    friends. I am sure they’ll be benefited from this website.

    Review my page … Private Island Party Coupon Code

  • Randolph:

    Hello! I simply wish to offer you a big thumbs up for your great info you have
    got right here on this post. I’ll be returning to your web site for more

    Feel free to surf to my blog post: make money online from home,,

  • Dale:

    As a form that could quickly change ownership via purchase and sell, gold bars are perfect assets as they could be put
    to use as hedge from sudden economic hardships.
    Gold can be a stable asset that keeps its purchasing power and preserves wealth.
    In this gold investment vehicle, two parties (a “buyer” plus a
    “seller”) enter into a contract, in which the seller agrees to
    cover the buyer the main difference between the current price of gold and its value at contract time.
    This form of account might be created as soon as you get your
    first pay check. The Entrust Group could be the premier provider of account administration services for self-directed retirement
    plans inside US.

    My web-site :: spot gold

  • Timothy:

    Offering the typical polished Metro UI experience along with superior photographic technology by way of a 12 MP camera
    having a Carl Zeiss lens, all in a lighter
    handset, the Finnish mobile phone manufacturer’s support of Windows Phone in favor of its own (failed)
    Mee – Go platform is observed by many being a last throw in the dice.

    You find the exterior in the Xbox being shielded from the damaging outcomes of normal elements and
    manmade shenanigans like dust particles, slimy stuff, slight scratches, and sharp objects.

    Accessing video content works in much the same
    way, although you will have to access it from the appropriate Library, i.
    This has to be boon to people who are currently made to subscribe expensive
    packages only to watch one or two channels. By 2005, Microsoft retired
    the venerable Xbox in planning of releasing its next console, the Xbox 360.

    Also visit my blog – ign xbox one (Timothy)

  • Marcus:

    After exploring a number of the blog articles on your blog, I really like
    your way of blogging. I bookmarked it to my bookmark webpage
    list and will be checking back soon. Please check out
    my website as well and let me know what you think.

    My web-site: extreme rush nitric oxide booster reviews

  • Rosetta:

    Hi to all, how is all, I think every one is getting more from this site, and your views are
    nice for new users.

    My web site elmhurst homes for sale

  • Bryon:

    We stumbled over here by a different website and thought I might check things out.
    I like what I see so i am just following you.

    Look forward to looking into your web page repeatedly.

    My weblog :: Sunnyside Homes for Sale

  • Gay:

    What a data of un-ambiguity and preserveness of valuable know-how about unexpected emotions.

    Look at my web site; knot

Leave a Reply

Powered by WishList Member - Membership Site Software