Purchasing Real Estate in an IRA
LAST UPDATED: 01 April 2020

Purchasing Real Estate in your IRA

Article Content Provided By: Midland Trust, a Self-Directed Plan Administrator.

How to buy real estate with an IRA is a common question that investors ask. While buying property in your IRA is similar to a typical real estate transaction, there are some additional steps that must be followed. It's very common to go through a self-directed plan administrator to ensure that all the correct paperwork is processed inside your Investment Retirement Account.

Here are the steps needed to acquire real property in your IRA:

  • Open a self-directed account with a plan administrator. You may select a Traditional IRA, Roth IRA, a SEP Midland. You can choose a Traditional IRA, Roth IRA, SEP IRA, Simple IRA, Individual 401K or or an individual(k). Health Savings Accounts and Educational Savings Accounts can also be Self-directed.


  • You must fund the account. Once the account is opened, it needs to be funded which can be done a few different ways. You can make yearly contributions according to your plan's financial contribution limit. You may transfer funds from an existing retirement plan, or you may roll over funds from an existing retirement account into your new self-directed account.
  • Find the real estate investment you want to purchase. Just as you would with any real estate transaction, be sure the property is a good investment. Have a trusted Realtor perform all the necessary due diligence to ensure that you are making a sound real estate investment.


  • Understand Prohibited Transactions and Disqualified Individuals. IRAs are governed by several rules that you need to understand before attempting a purchase. Rules include: You may not sell or purchase a property you personally own to or from your IRA. You may not vacation in a property held in your IRA. Your IRA may not sell or purchase a property from a disqualified person.


Disqualified Persons Include: 

  • The IRA Holder
  • The IRA Holder's Spouse
  • The IRA Holder's Immediate Family & Spouses (Descendants and Ascendants)
  • IRA Holder's Investment Advisors or Managers
  • Any Entity in which the IRA Holder has a 50% Interest
  • Any IRA Manager, Trustee or Custodian

The Purchasing Process:

The real estate you are purchasing in your IRA must list the IRA as the owner on all the title documents. For example if you were to use Midland Trust as your Self-Directed Administrator, the title would read: _Midland Trust, Inc. FBO (your name) IRA Account Number.

A Buy Direction Letter supplied by your Self-Directed Administrator must be completed so that they can work with the real estate closing agent directly on your behalf. You as the owner of the IRA, you are required to review the closing documents for accuracy, but the contract will be signed by your Administrator upon closing.

After the real estate is successfully purchased, all money associated with the property must flow into and out of your IRA account. All income and expenses generated by the property stay within the IRA.

Selling Property Held in an IRA:

Similar to a purchase, your Self Directed Administrator will provide the paperwork needed to complete a successful sale and will work with the title company of your choice or a real estate attorney to help you with the sale's transaction. It is up to you to review the closing documents for accuracy, just as you did during the property purchase. Your Administrator will sign all the closing documents on your behalf. All the gains from the sale are tax-sheltered and deposited into your IRA.

This content was provided by Midland Trust, a company that Pfeifer Realty Group has trusted for many years.

If you are interested in purchasing real estate inside your IRA, Contact Pfeifer Realty Group and we would be happy to introduce you to the process and the Self-Directed Administrators that can make this happen successfully.

Related Articles:




Related Articles