Investing in real estate with your retirement accounts

Many Americans’ IRAs and 401k are where most of their savings are stored. That hard-earned money has shown to be at risk in 2022 within the volatile stock market. A common question we get from investors is: “do you allow IRA or 401k investing in real estate deals?” And the answer is, YES! It is a fantastic way to grow your retirement account tax-free or tax-deferred at a rate that can be much greater than investing in just stocks and bonds.

There is a type of individual retirement account (IRA) that allows for investments outside of traditional financial markets like stocks and bonds, it is called a self-directed individual retirement account (SDIRA).

401k or IRAs can be rolled over to invest in assets like precious metals, real estate, private equity investing, bitcoin, and more. Self-directed retirement accounts provide the same tax advantages as IRAs and can be set up in a traditional or Roth format. There are many rules and regulations you must ask your tax, legal, or accounting specialist about for your particular situation, but we have found that investing with your retirement account can be quick, easy, and fun. You get to be in charge of where your money goes rather than a financial manager that might not have all your best interests in mind when he or she is collecting fees from moving your money. While we do not provide tax or accounting advice, this article can help inform you with some quality insights.

Benefits of investing in real estate with retirement accounts

  1. ROI Potential – Investing in alternative assets has tax benefits within a retirement account. You can purchase a home through an SDIRA for $100,00, and then sell it for $160,000 ten years later. Through the holding period, let’s say you rent it annually for $25,000. You are capturing rental income and the final sales proceeds in a tax-deferred way. This is possible because you are using a traditional SDIRA. If held in a Roth SDIRA, the rental income and sales profits are made tax-free!
  2. Controlling your financial future – Retirement accounts by default do not have flexibility and autonomy. SDIRA’s allow you to make the right financial decisions for yourself and your family.
  3. Diversification – The volatility of stocks, crypto, and other assets makes a great case for diversification which can help protect your wealth! Commercial multifamily real estate is a great diversification tool that can help you get better capitalized for future investment opportunities, with lower risk and volatility.

Now, all of this is fantastic. Before continuing, you must understand a few crucial SDIRA guidelines that must be adhered to. It is a more straightforward process if you use the SDIRA to make a passive investment in a real estate syndication that pools investor money to buy assets.

On the other hand, you must exercise extreme caution if you use the SDIRA to actively acquire and manage your own real estate investments. You will be disqualified from the SDIRA and cause a taxable event if you don’t adhere to all of the related rules and regulations.

1) Neither you nor a “disqualified individual” may purchase real estate with your SDIRA. Transactions that are deemed to be “self-dealing” are prohibited by IRS laws. For additional information on banned transactions, see this IRS page.

2) Your self-directed IRA’s property cannot be used to provide you with indirect benefits. Examples of “indirect benefits” include buying a vacation house for occasional usage or leasing office space from a building owned by your self-directed IRA for your personal use.

3) IRA assets need to have distinctive titles. Investments should be titled in the name of your IRA because you and your SDIRA are considered two distinct entities.

5) Unrelated Business Income Tax must be paid by investments that utilize financing (UBIT). The use of debt financing in the deal will result in Unrelated Debt-Financed Income (UDFI) for SDIRA passive investors in a real estate syndicate and a UBIT tax liability. However, these taxes often have little to no effect in terms of actual money and income %. You will need to work with your CPA to complete the required tax filings as a result of the existence of this taxable income.

6) The IRA must be used to cover any costs associated with properties that are owned by the IRA. These costs would include all ongoing costs such as property taxes, electricity, maintenance, and home association dues.

7) You must direct deposit any and all income produced by assets held within your SDIRA into your IRA, none can go to your personal bank account.


An SDIRA is an incredible retirement and wealth-building tool that gives you control over your retirement to make the best decisions for your yourself and family. At Growth Vue Properties we bring multifamily investment deals to your email inbox for your review and investment. This month we are closing a 136-unit fund in Des Moines, Iowa, but we still have room in our 200-unit Dallas Texas deal for accredited investors. If you want to use your SDIRA to invest in either deal, act now! Join our investor list below and get alerted when we have a new deal flow.

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