Investing in Real Estate with IRA Funds

Many people don�t realize that the IRS does not prohibit you from putting real estate in your IRA. You can actually use a Traditional IRA, Roth IRA or SEP-IRA when it comes to investing in real estate. However, there is a very strict set of guidelines that you should follow if you choose to invest in real estate within your IRA.

The rules are complicated, and you risk voiding the tax-advantaged status of your IRA if you violate them. This could mean hefty taxes and penalties.

Among the rules are the following key points:
1)You are not allowed to purchase property that you already own in your IRA.
2) Generally, you can�t buy property from your spouse, children, parents or grandparents.
3) You are not allowed to personally benefit from the property--in other words, it must be for investment purposes and you cannot live in or personally use the property.
4) All the income from the property must be re-invested back into the IRA.

These are just a few of the general guidelines. It is important to note that there are various ways to structure a real estate IRA that may allow the investor to accomplish specific objectives that might not otherwise be possible.

This article was reprinted with permission. Bob Priest, MBA, CFP, is a Certified Financial Planner. He can be reached toll free at 877-Bob-Priest, or visit his website at www.BobPriestFinancial.com. All opinions are that of the author.