Rules are complex for purchasing real estates for rent with Individual Retirement Account (IRA) funds. To withdraw money from a traditional retirement account or a Ross retirement account, you must first set up a self-directed personal retirement account.

If you want to purchase real estates with the money in the personal retirement account, you must have enough money in the retirement account. If the money in the retirement account is not enough and you need to borrow money, it will involve the rules of unrelated business taxable income. These rules require taxpayers to pay a high tax on rent income. When the real estates are sold in the future, the tax rate on the profits is also very high. This income will be taxed, and if later you withdraw funds from the retirement account, you will need to pay tax again. This way, taxpayers are taxed twice.

There is another way to invest in real estate with the retirement account. A good choice is to invest in Real Estate Investment Trust (REIT). REITs cover apartments, office buildings, malls, warehouses and hotels. It is required to provide 90% of the taxable income to shareholders. Dividends are quite generous.

It is possible to buy a house with IRA, but there are many rules that have to be followed. Otherwise, you will face the dilemma of double taxation. Besides buying a house with IRA, taxpayers can consider using other methods of investment after retirement. But, please pay attention that each taxpayer’s financial situation and demand are different, and their methods of investment are naturally different. If there is a need, we recommend that you consult with professionals to seek more accurate and more custom-made professional advice.