Ten Reasons to Consider a Real Estate IRA, Part I

We have a lot of people contacting us and asking us what they should make of all of this Self-Direction stuff. They haven’t heard much about directing their own IRAs, so naturally they’re curious: is this an option that many people choose? And if so, why don’t more people choose it? And when it comes to the types of investments you can make with this type of IRA, such as a Real Estate IRA, it opens up a whole new can of worms. They want to know the limits, the possibilities, and the strategies people use in this type of retirement account.

Although we feature a lot of information on this site about owning a Real Estate IRA, we’re happy to pare it down to the essentials and talk about why people even start considering these types of investment accounts. That’s why we’ve put together a two-part series: the ten reasons you should at least consider a Real Estate IRA. Here are the first five reasons:

Reason #1: It’s not so different from most IRAs after all.

Many people hear this term “Self-Directed IRA” and they think they’ve entered a time portal or an alternate dimension. We’re here to tell you that the difference doesn’t have to be so stark.

A Real Estate IRA is just that – an IRA in which you invest in real estate. Although there are different governing rules and regulations when it comes to how it’s done, that’s the basic idea. You see, you can use a Self-Directed IRA to invest in just about anything (with a few key limits, of course) from real estate to precious metals. Many people simply choose not to. When you think about opening an IRA for the purposes of investing in real estate, think of it as similar to opening up an IRA for the purposes of investing in just about anything else; it’s really not all that different when it comes down to it.

And, as you’ll see, that’s a good thing.

Reason #2: Using a Roth IRA, you can collect rental income tax-free.

This is one of the tips from the aforementioned Real Estate IRA page we recommended earlier. A Roth IRA comes with a great degree of protection from income taxes when you use it properly—that’s what the Roth IRA is for, after all. And since you can invest in real estate through a Roth IRA, that means that you’ll be entitled to many of these protections.

There are some caveats, of course; you can’t live in the real estate in which you invest—and that goes for all different IRA account types.

Reason #3: Utilizing leverage.

If you want to secure an income for yourself for retirement but believe that real estate might be out of your budget, consider that you can use non-recourse loans in order to acquire real estate through an IRA. Non-recourse loans refer to loans in which the lender can’t come after your other assets should you default, so that means that the rest of your investments will be safe in the event of a default.

Reason #4: Capital gains tax benefits.

As we noted in our Real Estate page, there are capital gains tax benefits when investing in real estate, as well: you can sell property within your Real Estate IRA without having to worry about capital gains.

If you want to learn more about Real Estate IRAs, continue on to “Ten Reasons, Part II” or contact us at 866-7500-IRA or 828-257-4949 to find out how you can learn more.


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