Investing in Real Estate with an Inherited IRA

Depending on the account structure and the beneficiary’s goals for the account, there are many different strategies available to invest in exciting alternative assets that lie outside of the stock market, including rental properties. Using an Inherited IRA to invest in real estate provides the opportunity to generate income from rent, appreciation, and more.

Ready to learn more about real estate investments? Click here to download our Real Estate Investing Guide.

Real Estate With an Inherited IRA

Inherited IRA owners can invest in commercial property, residential property, raw land, agriculture, and even mineral rights. An Inherited IRA can also participate in real estate through fix-and-flip projects and wholesaling.

To kick off the process of IRA real estate investing, the beneficiary will need to hold their Inherited IRA with a self-directed IRA custodian who allows retirement investing in assets outside of Wall Street. Once opened and funded, the self-directed Inherited IRA can buy rental property outright and become the title holder.

If the IRA cannot finance the full purchase price of a rental property, the account can partner with other investors. There are many purchase structures available to suit the beneficiary’s goals for their real estate Inherited IRA.

If the beneficiary would prefer not to partner with another investor, he or she can take out a non-recourse loan. However, neither you nor a disqualified person can guarantee a loan for an IRA property, as this constitutes prohibited “self-dealing.”. Debt-leveraged profits may be subject to UBIT, but there can certainly still be benefits to using a loan to buy a potentially more lucrative property than the IRA could have purchased otherwise.

Stay Informed

In terms of distribution strategies for real estate, the Inherited IRAs have several different options. To learn about these strategies and the unique distribution rules that apply to Inherited IRAs, submit a secure message through the Client Portal or give us a call at 877-742-1270.

Related Articles