Can I purchase real estate with my IRA?

December 8, 2003

From:  Beverly
Date:  Sun, 26 Oct 2003

I want to purchase real estate with my IRA. Is that possible?

If so, will I have to pay all those nasty penalties?



Date:  31 Oct 2003

Hello Beverly,

An IRA is allowed to own real estate. Typical IRA trustees, such as stock brokerage companies and most banks, will refuse to accept real estate. You have to find a trustee that will accept the property, and they typically charge high maintenance fees.

Remember that income distributed from an IRA is typically taxed as ordinary income, so there is a high tax cost involved in using an IRA to hold real estate. A Roth account is a better alternative.

There are many potential issues from holding rental real estate in a retirement account, including subjecting the account to an income tax on unrelated business income. You should definitely get some detailed professional guidance before you go ahead with this.

Good luck!
Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.

Home    Newsletter Archive    Introducing Michael Gray, CPA    Articles    Tax FAQ   Need Help?    Other Links

Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Our Blog

Subscribe to Michael Gray, CPA's
Tax & Business Insight

We respect your email privacy