A Self-Directed Real Estate IRA is a supercharged IRA that enables you to invest your retirement money directly into real estate such as multi-family, commercial, raw land, fix-and-flips, tax liens, and more. It has the same tax benefits as a standard IRA and can be set up as Self-Directed Traditional IRA, Self-Directed Roth IRA, Self-Directed SIMPLE IRA, or Self-Directed SEP IRA.
A Real Estate IRA is another name for a Self-Directed IRA that’s used to invest in real estate. This includes multi-family, commercial, fix-and-flips, residential, raw land, tax liens, crowdfunding opportunities, and more.
Some benefits of investing in real estate with retirement funds include high growth potential, generally stable returns, and retirement portfolio diversification.
Self-directed real estate investors must follow rules regarding titling, handling income and expenses, financing, and paying applicable taxes.
Madison Trust has a simple, three-step set up process to invest in real estate with a Self-Directed IRA: open an account, fund your account, and place your investment.
A Self-Directed IRA can legally invest in almost any asset. The only assets that are off-limits are collectibles, life insurance,
and S-Corporation stock. Some of the more popular real estate investments include:
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Amongst the lowest in the industry, Madison Trust's flat-rate fees help ensure the profitability of your investments. We also allow you to skip the asset-based holding fees and manage as you see fit.
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Yes! A Self-Directed Real Estate IRA lets you own alternative assets in your retirement account. Real estate is one of the most popular investments. To invest in real estate with retirement funds, you must open an account at a Self-Directed IRA custodian.
To invest in real estate with retirement funds, start by opening a Self-Directed Real Estate IRA (SDIRA) at a qualified custodian. When your SDIRA has been established, you can fund your account through a transfer, rollover, or contribution. Then, you will instruct the Self-Directed IRA custodian to invest in the property of your choice on behalf of your IRA.
IRA funds are generally used to purchase a property. However, you may obtain financing to invest in real estate. If you are financing your investment, please keep in mind a few things:
• A disqualified person cannot issue the loan, as that would constitute a prohibited transaction.
• The loan must be non-recourse so that the loan is backed by the property and not the borrower personally. One cannot personally guarantee a loan issued to their IRA, since that would constitute a prohibited transaction.
• The earnings attributable to the leveraged portion are subject to UDFI and the filing of Form 990-T is required.
No. All investments made by your IRA are to benefit your IRA exclusively, not yourself personally. Living in a home owned by your IRA violates IRS rules and would constitute a prohibited transaction. You can use a Self-Directed IRA to buy a house, but you cannot live in it, and neither can certain family members.
Yes! With a Self-Directed Real Estate IRA, you can invest in a variety of alternative assets, including real estate. You can open a Self-Directed Real Estate IRA as either a Self-Directed Traditional IRA or a Self-Directed Roth IRA.
You may consider upgrading your Self-Directed Real Estate IRA with checkbook control. This includes the creation of an IRA LLC, often referred to as a Checkbook IRA. An IRA LLC gives you more flexibility and control of your Self-Directed Real Estate IRA.
With a Real Estate IRA LLC, you can manage everyday transactions in real time without going through your Self-Directed IRA custodian. This way, you can make investment decisions quickly and efficiently.
All income and expenses associated with your investment must flow in and out of your Self-Directed Real Estate IRA.
Instruct Madison Trust to pay expenses by completing an Expense Payment Request Form and attach a bill or invoice to ensure the payment is delivered to the appropriate address.
To deposit income into your Self-Directed Real Estate IRA, complete a Deposit Information Form. This form notifies Madison Trust of the incoming funds.
As another option, an SDIRA can hire a company to manage the property, pay expenses, and receive property income.
Your Self-Directed IRA is the owner of the investment property. Therefore, the title is as follows: “Madison Trust Company Custodian FBO [Your Name] [Your Madison Trust Account Number]”.