The term “real estate IRA” encompasses any type of real estate investment in a self directed IRA or 401(k).

As an IRA custodian that allows real estate, we’ll explain several key points about real estate IRAs—including overviews, which types of real estate your IRA can purchase, and how it all works.

When you combine the advantages of a self directed IRA with your knowledge of real estate, IRAs allow you to earn tax-free/tax-deferred returns on your investments.

The rate of return on your investments is based on your knowledge and expertise in real estate. IRA investing is not based on the ups and downs of the stock market.

Historically, real estate has given many Americans with a stable investment vehicle that provides both income and appreciation. One of the greatest tools available to real estate investors is government-sponsored retirement plans, such as IRAs and 401(k)s.

Most investors believe that their only IRA investment options are bank CDs, the stock market, and mutual funds.

Few Americans realize that they have the option to self-direct their IRAs and other retirement plans into real estate—and that they can benefit from the tax advantages those plans provide. IRA investments earn tax-deferred/tax-free profits.

Imagine not having to pay taxes right away—or ever—on your real estate deals. Instead of paying 25%, or 30%, or even 50% of your profits to the government in taxes, you keep it.

Additional advantages of the real estate IRAs include:

  • The power of compound interest
  • A reduction of taxable income
  • Asset protection
  • Estate planning

If you’re a successful real estate investor, or if you’re just looking to diversify your retirement portfolio, the combination of real estate and your IRA can be very powerful.