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Lesson · Retirement · investing

Your IRA can buy real estate. Most people never hear that.

A self-directed IRA can hold real estate, private lending, and other alternatives — inside the tax shelter. But one prohibited transaction can disqualify the whole account.

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100%
of the LLC owned by the retirement account

How it works

The investor is not you

01
The account is the buyerCustodian FBO your name IRA
02
You sign as account ownerNever as yourself personally
03
Money in, money outAll of it moves through the IRA

WORKED EXAMPLE

Three accounts, one deal

Roth IRA $60,00060%
HSA $20,00020%
Solo 401k $20,00020%

TWO WORKFLOWS

Who actually wires the money

Custodian sends wireYou send the wire
Docs uploaded firstReconcile after
Custodian holds assetYou are the trustee

Key points

What the custodian needs

✓
Subscription agreement
✓
Private placement memo
✓
Operating agreement
✓
Buy direction letter
✓
Wire instructions
✓
Exact account titling

Key points

Where people blow it up

✓
No personal use
✓
No paying yourself
✓
Expenses paid by the IRA
✓
Custodian does not vet deals
✓
Debt can trigger UBIT
✓
Beneficiaries left blank

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The The Self-Directed IRA field guide — one page

The strategy, the checklist, the key numbers, and links to the actual tax code. Print it, take it to your CPA. Free, no strings.

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Field guide · PDF

The Self-Directed IRA

Cliff notes + checklist + the law

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The law behind it

Primary sources

Verify against the source before you rely on it. This is education, not legal or tax advice.

26 U.S.C. Sec. 408 — Individual retirement accounts — the account rules a self-directed IRA operates under.law.cornell.edu/uscode/text/26/408
26 U.S.C. Sec. 4975 — Prohibited transactions — dealing with disqualified persons can disqualify the entire account. The line you cannot cross.law.cornell.edu/uscode/text/26/4975
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