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Madison Trust is an investor-first Self-Directed IRA custodian offering flat, predictable fees and live guided support for alternative investments.
A Real Estate IRA is a type of Self-Directed IRA account that allows you to invest in a variety of real estate assets such as rental properties, commercial buildings, raw land, and more, while keeping your retirement funds tax-advantaged. Unlike standard IRAs that are typically limited to Wall Street products, like stocks and bonds, a Real Estate IRA allows you to diversify your retirement portfolio into alternative assets, providing greater flexibility, control and potential for long-term growth.
Key Features of a Real Estate IRA
At Madison Trust, we combine deep industry expertise with a client-first approach to Self-Directed retirement investing. We make it simple to invest in real estate through an IRA, whether that includes rental properties, private REITS, or commercial assets. Our streamlined onboarding process, transparent fee structure, and dedicated support team help ensure clients feel confident in navigating their Self-Directed investing journey.
Your Self-Directed IRA can hold many forms of real estate, including:
A Self-Directed Real Estate IRA can unlock new opportunities for investors looking to diversify beyond Wall Street products, like stocks and bonds. This strategy may be a good fit for:
Not sure if a Real Estate IRA aligns with your goals? Our SDIRA Specialists can help you understand how Self-Directed investing works and what to consider before getting started.
Investing in real estate through an SDIRA offers several advantages:
Proper titling should reflect:
Madison Trust Company Custodian FBO [First Name] [Last Name] [Madison Trust Account Number].
If you’re investing with a Self-Directed Checkbook IRA at Madison Trust, your investment will be in the name of your IRA LLC, and will be simply titled as follows:
“Name of IRA LLC”.
Assets purchased using IRA funds are not held personally, as you are instructing your Self-Directed IRA custodian to execute the investment for the benefit of your IRA.
You and other disqualified persons (such as your spouse, parents, children and entities you or a disqualified person owns 50% or more of) may not live in, work on, use, or personally benefit from the property while it is held in your retirement account.
Loans issued to an IRA, can generally only be guaranteed by collateral (the item being purchased) and not the IRA owner's personal guarantee, as this could trigger a prohibited transaction. As such, any loans issued to your IRA must be non-recourse and borrowed by a non-disqualified person.
While profits within an IRA are generally tax-advantaged, it is important to consider if your SDIRA will be subject to UBIT or UDFI:
Unrelated Business Income Tax (UBIT) may apply if you invest in an active business, as defined by the IRS. UBIT may apply to a rental property investment if:
Unrelated Debt-Financed Income (UDFI) may apply when a retirement account purchases real estate using leverage. The net profits earned from the borrowed portion are considered UDFI and may be subject to a UDFI tax.
It is considered best practice to consult with a qualified tax or financial professional to determine if and how these rules may apply to your investment.
Absolutely! You can buy a rental property using IRA funds through a Self-Directed IRA. However, keep in mind you won’t be able to personally use the home while it is held in your IRA, and all expenses and income must flow through your retirement account.
Yes! With a Self-Directed Roth IRA, you can invest in a variety of alternative assets, including real estate.
All transactions related to a property held in your IRA must flow through the IRA itself. All expenses related to the property including taxes, repairs, maintenance, etc. must be paid directly from the IRA retirement. Likewise, any income must be returned to the IRA account.
Yes, you can sell real estate held in a Self-Directed IRA, as long as the transaction follows IRS rules. The proceeds from the sale must go directly back into the IRA, not to you personally. You cannot sell the property to or buy it from yourself or disqualified parties, such as most lineal family members. All profits from the sale remain tax-deferred (Traditional IRA) or tax-free (Roth IRA) until distribution.
No, generally you cannot perform your own sweat equity on a property held by a Self-Directed IRA. Handling repairs or performing maintenance may be considered a prohibited transaction. The IRS requires that house labor be handled by an independent third party to maintain the tax-advantaged status of the IRA. Direct involvement can result in potential penalties and disqualification of the account.
No, you cannot take depreciation on real estate held in your Self-Directed IRA. Since the property is owned by the IRA and not by you personally, any tax benefits like depreciation stay within the account. You don’t report income or losses from IRA-held property on your personal tax return. All gains or losses are realized only when distributions are taken from the IRA.
REFER-A-FRIEND
Refer a friend to Madison Trust and earn $200 when they fund their Self-Directed IRA.
REFER-A-FRIENDNo thank you
REFER-A-FRIEND
Refer a friend to Madison Trust and earn $200 when they fund their Self-Directed IRA.
REFER-A-FRIENDNo thank you