We received this question from a viewer: “Can I use funds in my IRA to purchase real estate?” In short: yes! So long as the holder of an IRA follows very specific rules, it is possible to use funds in an IRA to invest in real estate. Investors who want to use funds in their IRA will use what’s known as a “self-directed IRA.” Before starting this process, investors should meet with a real estate attorney, CPA, and their financial advisor. Like all investments, it should fit into your overall financial plan while maximizing tax efficiency. There are a number of companies that handle self-directed IRA funds. There are many rules and restrictions which make costly mistakes possible. It is imperative to work with a reputable company. You may ask: “What do I need to do?” The investor will transfer IRA funds into a separate custodian’s account. Instead of investing in the stock market, bonds, and other securities, investing in real estate is possible. One important principle to remember is that the investor cannot commingle funds. In other words, the investor may not partner personally with IRA funds. At the outset, the investor must determine whether they have enough funds in their IRA to complete the entire transaction. One exciting opportunity that many investors overlook is lending from a self-directed IRA to others who are investing real estate. An investor may be willing to pay a rate of interest that is far higher than the rate of return in other types of investments. As with the more traditional approach to self-directed IRA investing, before considering any type of investment, you should consult with your real estate attorney, CPA and Financial Advisor first to consider your risk and objectives. If you would like more information about investing with a self-directed IRA, contact Stiles Law at (781) 319-1900 or stiles-law.com. Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy. Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts....(read more)
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