Since most Americans have most of their savings in tax-sheltered accounts, using the money in the IRA to fund real estate investments is one option. A Self-Directed IRA (SDIRA) offers a unique avenue for investing in real estate, extending beyond traditional stocks, bonds, and mutual funds.
IRAs are standard vehicles for retirement, allowing for tax-free contributions (traditional IRAs) or tax-free withdrawals (Roth IRAs). However, IRAs allow investments to grow tax-free, meaning there are no taxes on the gains within an approved IRA account.
With a real estate IRA, you can own various properties, including raw land, condos, single and multi-family homes, commercial properties, apartment buildings, mobile homes, real estate notes, and more.
First, you must use a custodian approved by the IRS to manage this Self-directed IRA. This means that the company or individual in question will be responsible for holding and administering the assets in the account.