Self-Directed IRA Investments
Self-Directed Real Estate IRA
Hold rental property, commercial real estate, raw land, and REITs inside your IRA. Title goes in the name of the IRA, rent stays in the IRA, and you direct the purchases.
Real estate in a retirement account
Hold real estate inside your IRA.
A real estate IRA is a self-directed IRA that holds physical property or real estate vehicles instead of stocks and mutual funds. Real estate has been the most common asset Accuplan investors hold since 1985, and thousands of investors run their property portfolios through us.
Accuplan is the third-party administrator. American Estate & Trust is the custodian. You direct the purchases. We handle title work with the custodian, wire instructions, and the annual reporting that keeps your account in good standing with the IRS.
A retirement account that owns property
Real estate that compounds inside your IRA.
A real estate IRA holds physical property or real estate vehicles in place of stocks and mutual funds. Title goes in the name of the IRA. Rent and appreciation stay inside the account, where they compound without an annual tax bill. All expenses come from the IRA. You and your immediate family cannot use the property. Beyond that, you direct the strategy. Accuplan administers the cash, the title, and the annual reporting. Tax is paid only when you take distributions in retirement, or never, if the IRA is a Roth.
The basics at a glance
What you'll come back to.
Title
Held in the name of the IRA
Rent
Stays in the IRA
Expenses
Paid from the IRA
No use
By you or family
Non-recourse
Only loan type allowed
Since 1985
Administering real estate IRAs
How it works
Real estate IRA rules and tax treatment.
Real estate inside an IRA follows a specific set of IRS rules. The rules exist to keep the IRA from doing business with you or your family. Skim the labels, dive into the rows that matter to your deal.
A few terms we'll use
- Disqualified person
- You, your spouse, your parents and grandparents, your kids and grandkids, and their spouses. The IRA can't do business with any of them. Read more on disqualified persons, or see the IRS source at Retirement Topics — Prohibited Transactions.
- Prohibited transaction
- Any deal between the IRA and a disqualified person. The IRS treats it as breaking the rules of the account. More on indirect-benefit traps.
- Non-recourse loan
- A mortgage where the lender can take the property if you default but can't come after you personally. It's the only kind of debt an IRA is allowed to take on.
- UBIT
- Unrelated Business Income Tax. The IRA owes it when income comes from running an active business rather than passive investing. IRS, UBIT.
- UDFI
- Unrelated Debt-Financed Income. The portion of rent or sale profit tied to the financed share of a property. Taxable to the IRA. Our overview of UBIT and UDFI.
- In-kind distribution
- Taking property out of the IRA as the property itself, not as cash. Used when the IRA holds something hard to sell and you need to satisfy an RMD. See self-directed IRA rules.
How property is taxed
Rent and sale profits stay inside the IRA. You pay tax only when money comes out, and how it is paid depends on whether the IRA is Traditional or Roth.
Traditional IRA
Contributions may be tax-deductible. Rent and gains grow tax-deferred. Withdrawals in retirement are taxed as regular income. Traditional IRA details.
Roth IRA
Contributions are made with after-tax money. Rent and gains grow tax-free. Qualified withdrawals after 59½ come out tax-free. Roth IRA details.
Most all-cash residential rentals do not trigger any current-year tax at all. The leverage and active-business cases are the exceptions. More on how self-directed IRA accounts are taxed.
Who counts as disqualified
The IRA can't do business with these people, benefit them, or receive a service from them. The list comes from the IRS.
You and your spouse
You and your spouse can't buy from, sell to, or work for the IRA. You also can't use the property.
Parents and grandparents
Your parents, grandparents, great-grandparents, and any of their spouses. The chain runs all the way up.
Kids and grandkids
Your children, grandchildren, great-grandchildren, and the spouses of any of them. The chain runs all the way down.
Companies you control
A business you own 50% or more of, or where you serve as an officer or major shareholder. The IRA can't buy from or sell to those companies either.
Siblings, cousins, aunts, uncles, and friends are not on the disqualified person list under the IRS definition, unless your IRA also pays them directly for services. The rules are complex. Talk to a tax advisor before doing any deal that involves someone you know. Read more.
What you cannot do
Each of these breaks the rules. The IRS can treat the entire IRA as distributed.
Personal use
Stay overnight, vacation there, or let family use it. The property is only for tenants who are not on the disqualified person list.
Sweat equity or personal services
Personally fix, paint, improve, manage, or provide any services to the property. This includes finding tenants, coordinating repairs, negotiating leases, and performing professional work (legal, accounting, construction management). The IRS treats your labor and services as a free benefit to the IRA. Hire unrelated contractors and property managers instead.
Mix funds
Pay an expense out of pocket, or deposit rent into a personal account. Every dollar in and out has to run through the IRA.
Buy from or sell to family
Purchase a property from a disqualified person, or sell one to them. The IRA can't trade with anyone on the list.
Personal guarantee
Sign personally for a loan on the property, or use the IRA as collateral for a personal loan. The IRS treats either move as a prohibited transaction.
Pay yourself a fee
Charge the IRA a management fee, commission, or finder's fee for your own time. The IRA isn't a way to pay yourself.
Indirect benefit counts too. If you personally gain something from the IRA's property, even without a direct transaction, the IRS can treat it as a violation. More on the indirect-benefit rule.
When the IRA owes tax
Two situations can pull an otherwise tax-free IRA into a current-year tax bill.
UBIT
Active business income
Triggered when the IRA runs an active business rather than passively collecting rent. Long-term rentals don't trigger UBIT. Short-term rentals where you provide hotel-style services (cleaning between guests, daily linens, meals) can. IRS, UBIT.
UDFI
Debt-financed income
Triggered when the IRA borrows to buy property. The financed share of rent each year, and of profit when you sell, is taxable. The all-cash share keeps growing tax-free as normal.
UDFI is the more common one for real estate. The IRA reports it on IRS Form 990-T and pays tax from IRA cash. More on UBIT and UDFI.
Penalties for breaking the rules
The consequence depends on who caused the problem. If you think a line may have been crossed, contact a qualified tax advisor immediately.
You broke the rule
The IRS shuts down the entire IRA as of January 1 of the year you broke it. The whole balance becomes taxable income that year, plus a 10% early-withdrawal penalty if you're under 59½.
Someone else broke it
The other person owes a 15% tax on the deal amount. If they don't fix it within the correction window, the tax grows to 100%.
The 100% penalty only applies when the problem isn't fixed within the correction window. Quick correction matters. See IRS, Prohibited Transactions.
Funding the deal
Four ways to put the money together. All earnest money, closing costs, taxes, insurance, and repairs come from IRA funds. Personal cash never touches the property.
Direct purchase
IRA cash covers the deal in full. The cleanest path. No leverage, no UDFI exposure.
Partnered purchase
Co-own with another IRA, with you personally, or with a third party at closing. Ownership shares are fixed on day one.
Non-recourse loan
The IRA borrows against the property only. The lender can take the property in a default but can't come after you. No personal guarantees allowed.
Real estate crowdfunding
Pooled deals through platforms that accept self-directed IRA capital. Confirm the platform supports IRA subscriptions before you commit.
New to financing inside an IRA? Compare lending options or read real estate IRA methods.
What you can hold
Real estate your IRA can invest in.
Single-family rentals
Long-term residential rentals are the most common real estate IRA holding. Rent stays in the IRA, and the property is titled in the IRA, not in your name.
Multi-family and commercial
Duplexes, apartment buildings, retail, office, and mixed-use. Larger deals often pair with non-recourse financing or partnered IRAs.
Raw land and agricultural
Undeveloped lots, farmland, and timberland. Carrying costs (taxes, maintenance) must be paid from IRA funds, not personal cash.
Non-traded and private REITs
Pooled real estate vehicles outside the public markets. A simpler way to add real estate exposure without holding deeded property directly. More on REITs in an SDIRA.
Partnered purchases
Your IRA can co-own with another IRA, with you personally, or with a third party at closing. Ownership shares are fixed at closing and proceeds split accordingly. Some investors use a checkbook IRA for faster execution.
Non-recourse loans
Your IRA can borrow to buy property, but only with a non-recourse loan against the property itself. Personal guarantees are prohibited. How interest rates affect real estate.
How to start
Three steps to buy property in your IRA.
From open to closing, your dashboard handles the paperwork.
Open a self-directed IRA
Set up your account online with Accuplan as your administrator and American Estate & Trust as the custodian.
Fund the account
Transfer from another IRA, roll over from a 401(k), or contribute new money. Direct funding from your dashboard.
Direct the purchase
You choose the property. AET, as custodian, signs the purchase documents and wires funds at your direction. Title is taken in the name of the IRA, not yours.
Frequently asked
Real estate IRA FAQs.
Can I buy real estate inside an IRA?
Yes. Real estate is the most common alternative asset Accuplan investors hold. Standard brokerage IRAs don't offer it, which is why you need a self-directed IRA. The IRS allows it as long as you follow the prohibited-transaction rules.
How long does it take to open a real estate IRA?
The online application takes about 10 minutes. Funding by transfer or rollover usually takes one to three weeks depending on the sending institution. New annual contributions can be made directly from your dashboard. Once the account is funded, you can direct a purchase.
How do I fund a real estate purchase?
Direct purchase with IRA cash, partnered with another IRA or a third party, with a non-recourse loan, or through real estate crowdfunding. All earnest money, closing costs, taxes, and ongoing expenses must come from the IRA, not your personal funds. Compare lending options.
Can I use my IRA as collateral for a personal loan?
No. The IRS treats any portion of an IRA used as security for a loan as a distribution. The pledged amount comes out as taxable income, plus a 10% early-withdrawal penalty if you're under 59½. This sometimes catches real estate IRA owners who try to back personal financing with the account balance. See IRS rules on IRA pledging.
Can I use my IRA to buy a vacation property and rent it out?
Yes, but you can't spend a single night there. The IRA owns the property. You and your immediate family are barred from using it under any circumstances, including off-season. If you ever stay there, even one night, the IRS treats the entire IRA as distributed. For a property you actually want to use, this is the wrong vehicle.
Who values the property each year?
You are responsible for furnishing an independent fair market value annually. Accuplan, as your administrator, collects the valuation. American Estate & Trust, as custodian, files Form 5498 with the IRS based on the values supplied.
What happens to the property when I take RMDs?
Required minimum distributions begin at age 73 (rising to 75 in 2033 under SECURE 2.0) for Traditional IRAs. Roth IRAs have no RMDs for the original owner. If your IRA holds property and not cash, you may need to take an in-kind distribution of an undivided interest, partner with cash, or sell the property to meet the RMD. Plan liquidity ahead. See IRS, RMD FAQs.
What happens to the property when I die?
The IRA passes to your named beneficiaries outside probate. Distribution rules then depend on beneficiary type. Under SECURE Act 2019, most non-spouse beneficiaries must empty the inherited IRA within 10 years. Traditional IRA distributions remain taxable as ordinary income. Roth IRA distributions are generally tax-free, but the 10-year rule still applies.
Keep reading
More on real estate IRAs.
What to Do With an IRA During a Recession
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Using a Portion of a Self-Directed IRA to Purchase an Investment Property
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Investing in Farmland Through Your Self-Directed IRA
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How to Start a Real Estate Investment Fund
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Using Checkbook Control to Invest in Real Estate With Your IRA
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