Can You Use Your IRA to Invest in Real Estate?

Yes—you can use your IRA to invest in real estate. But most people don’t realize it’s possible because traditional brokerage firms don’t offer this option. With a self-directed IRA (SDIRA), you’re not limited to stocks and mutual funds. You can invest in rental properties, raw land, commercial real estate, and even real estate syndications—all within your retirement account.

In this post, we’ll discuss options on how to invest your IRA in real estate, what types of properties you can purchase, the benefits and risks, and how to get started.

What Is a Self-Directed IRA?

A self-directed IRA (SDIRA) is a special type of retirement account that gives you the ability to invest in a much wider range of investments than a typical retirement account—including real estate. Unlike regular IRAs offered by big-name brokerages, SDIRAs allow for “alternative investments” like:

• Residential rental properties
• Commercial real estate
• Raw land and farmland
• Real estate investment trusts (REITs)
• Private real estate funds
• Real estate crowdfunding platform
• And much more

Rocket Dollar offers both Traditional and Roth SDIRAs, so you can choose the tax treatment that fits your goals. We also offer Solo 401(k)’s for those who qualify.

Why Use Your IRA to Invest in Real Estate?

1. Diversification Beyond Wall Street

Real estate can reduce your portfolio’s exposure to market volatility and offer steady, long-term growth.

2. Tax-Advantaged Growth

All income from real estate investments inside your IRA grows tax-deferred (Traditional) or tax-free (Roth). That means no capital gains or income tax as long as the money stays in the account.

3. Passive Income for Retirement

Rental properties can provide steady income in retirement. When held in an IRA, that income is sheltered from taxes until withdrawal.

What Kind of Real Estate Can You Buy?

Here are just a few ways investors are using their IRAs for real estate:

• Single-Family Homes
  • Rent out long-term or short-term
• Multi-Family Units
  • Duplexes, triplexes, or small apartment buildings
• Commercial Property
  • Retail spaces, offices, or industrial buildings
• Raw Land
  • Buy and hold or lease to farmers or developers
• Syndications/Funds
  • Pool money with other investors via private placements

Rules to Know Before You Buy

The IRS has some strict rules when investing your IRA in real estate:

• No self-dealing: You or your immediate family can’t live in, work on, or benefit directly from the property.
• No personal guarantees: You can’t use your credit to secure loans on behalf of your IRA.
• All expenses must be paid from the IRA, and all income must go back into the IRA.

If you break these rules, your IRA could lose its tax-advantaged status. If at any time you have questions or doubts about whether an investment is allowed within a retirement account, our support team is here to help you answer your questions.

How to Invest in Real Estate With an IRA

1. Open a Self-Directed IRA: Open an account with Rocket Dollar. Many folks who are planning on investing in real estate go with our checkbook control accounts.
2. Fund Your Account: Transfer money from an existing IRA or roll over a 401(k).
3. Choose Your Property: Do your due diligence—location, cash flow, expenses, tenants.
4. Purchase Through the IRA: The IRA owns the asset, not you personally.
5. Manage According to IRS Rules: Make sure all income/expenses stay inside the IRA.