You Should Really Move Your IRA into Real Estate

If you know me, you know that I’m an evangelist for real estate investment. I think it’s the best, most stable class of investment available to investors large and small, and I’m constantly urging everyone I know to add smart real estate purchases to their portfolios. Usually, people agree with me, but some aren’t sure they have the necessary funds. That’s when I tell them about self-directed IRAs.

Why I Like Self-Directed IRAs

You’re probably familiar with IRAs already. IRA stands for “individual retirement account,” and it’s a popular, traditional form of retirement savings with some nice tax advantages. A self-directed IRA is a little different. It’s a traditional or Roth IRA in which a custodian permits a wide range of investments allowable in retirement accounts. One of these alternative options is real estate.  It’s is a fantastic way to purchase potentially lucrative rental properties.

Given IRAs’ tax-friendly reputation, it may not shock you to learn that the biggest reason I recommend self-directed IRAs as a great retirement fund option is the tax benefits. Did you know May 15 is Tax Free Day? That means that from January 1–May 15, every dollar the average American earns goes to pay their annual taxes. Pretty incredible, right? The thing I love about using self-directed IRAs is that your investment earnings are tax-free or tax-deferred, depending on how you set it up.

As with any investment in your IRA, you can enjoy this tax-deferred income until the day you take withdrawals. Or, if your investment holdings are in a Roth IRA, your investment gains accumulate tax-free and you are able to withdraw them tax-free. (Wow!) You still must wait until you reach age 59 ½ to withdraw your funds without an early withdraw penalty. But investors can buy, sell, or flip properties and move funds from one project to another and still maintain the tax-deferral status of the IRA.

Another reason I recommend self-directed IRAs is that I don’t like the idea of tying up too much money in the stock market. Stocks are often volatile, with dramatic day-to-day swings. Diversifying outside of stocks and bonds and into real estate is a great way to rest easy knowing you now have tangible assets.


Here are the top benefits of moving your self-directed IRA into rental properties as I see it:

  • Tax Benefits
  • Portfolio Diversification
  • Avoiding the Stock Market
  • Steady Income from Rental Properties
  • Steady Appreciation

How to Get Started

The first step is to set up a self-directed IRA. A number of reputable businesses can provide you with the ability to set up self-directed retirement accounts. Choose a custodian that will help provide some much-needed guidance as you travel through the murky and confusing waters of the IRS tax code. Remember too, that your investment properties must generate enough cash flow to cover all maintenance and repair costs without the need for you to add cash each year.

Self-directed IRAs provide you with the ability to invest in investments that you know and understand. That’s the beauty of real estate. It’s an asset you can touch and inspect, and it’s the bedrock of the American economy. Why not make it the bedrock of your retirement account, too?