Real Estate IRA Guide: Buy Property With Your Retirement
You've spent decades watching real estate appreciate while your 401k rides the stock market rollercoaster. A Real Estate IRA lets you invest your retirement in rental properties, commercial buildings, or land—with the same tax advantages as your current accounts. Here's how it works.
What is a Real Estate IRA?
Here's the simple version: A Real Estate IRA is a retirement account where you can buy actual property instead of stocks. Same tax benefits as your 401k—but instead of owning shares in some company, your IRA owns a rental house, a commercial building, or a piece of land.
If you've spent 30 years understanding real estate in your area—watching what neighborhoods appreciate, knowing what makes a good rental—this lets you put that knowledge to work. The IRA legally owns the property, and all the rent goes back into your retirement account tax-deferred. You need a specialized custodian (not Fidelity or Vanguard), but the tax advantages are the same.
How Real Estate IRAs Work
Open a Self-Directed IRA
Choose a custodian that allows real estate investments. Fund via rollover from existing 401(k)/IRA or annual contributions.
Find an Investment Property
Research and identify a property for investment. It must be purely for investment—no personal use allowed.
Direct Your Custodian to Purchase
Instruct your SDIRA custodian to purchase the property. The IRA becomes the legal owner, not you personally.
Manage Through the IRA
All rental income goes into the IRA. All expenses (repairs, taxes, insurance) are paid from the IRA.
Enjoy Tax-Advantaged Growth
Rental income and appreciation grow tax-deferred or tax-free, compounding your retirement wealth.
What Can You Actually Buy?
If it's real estate, you can probably buy it with your IRA. Here's what most people invest in:
Residential Rentals
Single-family homes, duplexes, condos, and multi-family properties for rental income.
Commercial Real Estate
Office buildings, retail spaces, warehouses, and industrial properties.
Raw Land
Undeveloped land for future development or appreciation potential.
Real Estate Notes
Mortgages and trust deeds—become the bank and earn interest income.
Tax Liens & Deeds
Purchase tax liens for interest income or tax deeds for property acquisition.
REITs & Real Estate Funds
Private REITs, real estate crowdfunding, and syndications.
Real Estate IRA: Pros and Cons
Advantages
- Tax-deferred or tax-free growth on rental income
- Tax-deferred or tax-free appreciation
- Diversification beyond stocks and bonds
- Tangible asset you can see and understand
- Hedge against inflation (rents rise with prices)
- Potential for higher returns than traditional investments
- Control over your investment decisions
Challenges & Risks
- Complex IRS rules and prohibited transactions
- Cannot use property personally (even for one night)
- Must have cash in IRA for all expenses
- UBIT tax on leveraged property income
- Illiquid—can't quickly sell if you need cash
- Higher custodian fees than traditional IRAs
- Requires real estate knowledge and due diligence
Best Real Estate IRA Custodians (2026)
You need a self-directed IRA custodian that specializes in real estate investments.
Rocket Dollar
Checkbook control for quick transactions
Equity Trust
Largest SDIRA custodian, 50+ years experience
Entrust Group
Strong real estate expertise since 1982
Critical Real Estate IRA Rules
Prohibited Transactions (AVOID THESE!)
What You CAN Do
Real Estate IRA FAQ
Can I buy real estate with my IRA?
Yes, you can buy real estate with your IRA using a self-directed IRA (SDIRA). This allows you to invest in rental properties, commercial real estate, raw land, and more while enjoying tax-advantaged growth. You'll need a custodian that allows real estate investments.
Can I live in a property owned by my IRA?
No, this is strictly prohibited by the IRS. You, your spouse, parents, children, and other 'disqualified persons' cannot live in, use, or personally benefit from property owned by your IRA. Violating this rule can disqualify your entire IRA.
Can I manage the property myself?
This is a gray area. While you can make investment decisions, you cannot receive compensation for property management services. Most experts recommend hiring an unrelated third-party property manager to avoid prohibited transaction issues.
What if I need to make repairs?
All repairs must be paid for with IRA funds, not personal money. You cannot do the repairs yourself (that's providing services to the IRA). You must hire third-party contractors and pay them from the IRA.
Can I get a mortgage in my IRA?
Yes, but it must be a 'non-recourse' loan where only the property secures the debt—you cannot personally guarantee it. Also, income from leveraged property may be subject to UBIT (Unrelated Business Income Tax).
What happens when I sell the property?
The sale proceeds return to your IRA tax-free (at sale). With a Traditional IRA, you'll pay taxes on withdrawals in retirement. With a Roth IRA, qualified withdrawals are completely tax-free.
How much money do I need to start?
Some custodians have no minimum, but you'll need enough to cover the property purchase, closing costs, and reserves for expenses. Many investors start with $50,000-$100,000 in their SDIRA for real estate.
Know Real Estate Better Than Stocks?
If you've spent your career understanding what makes property valuable, you don't have to hand your retirement over to Wall Street. A Real Estate IRA lets you invest in what you actually know.
Diversify Beyond Real Estate with Gold
Many investors combine real estate IRAs with precious metals for true diversification. Gold provides liquidity when property markets are slow.