I’ve had a few discussions with people about self-directed IRAs and the possibility of investing your IRA in real estate, so I did some research and found some information about them and a group that specializes in them.
The answer is yes, you can tuck property into your retirement account.
Over the last few years, stocks have cratered. Despite their recent rebound, millions of retired and almost-retired have been forced to extend their working years just to maintain a minimum standard of living.
While your 401(k) plan may not offer real estate in any form, the fact is, you can own real estate in your retirement plans. Retirement plans are by nature long-term investments. You can't get much more long term than real estate. But you must keep in mind that you'll be able to invest only for income and appreciation. You can't deduct depreciation, as you can in a taxable investment.
You have to be very careful how you do it. A single bad move can create a major tax disaster.
An all-cash transaction is probably the easiest. If you don't have sufficient cash, your retirement plan can purchase a partial interest in a property. That's known as a tenant in common interest.
You can borrow the money to finance the property but will also need to pay the Unrelated Business Income Tax (UBIT). Depending on aggravation level, costs, tax rates and rates of return, the leverage may be worth the tax cost. Call for a recommended provider.
