Did you know your IRA can purchase real estate? Since 1975, IRAs and 401(k) plans have been afforded the ability to purchase real estate, helping knowledgeable investors see significant change in their retirement wealth.
FINANCING OPTIONS
CASH – The IRA pays cash for the entire property. The property is titled to the IRA and all income and expenses must flow through the IRA.
PARTNERING – IRAs can purchase fractional ownership of properties. Ownership interest is determined on the pro-rata amount of the investment purchased by the IRA. All income and expense must flow through the IRA in the same rate basis.
MORTGAGE – An IRA can purchase real estate with a mortgage as long as the loan is non-recourse, which means there is no personal guarantee to repay the debt by the IRA owner, or other disqualified persons. Repayment of the underlying debt must come from the retirement plan. Taking on debt in the IRA may subject the plan to Unrelated Debt Financed Income.
