3 Tips | Buying Real Estate with your IRA in Cherry Hill

3 Tips | Buying Real Estate with your IRA in Cherry Hill

ˆMany people are aware that real estate is an investment. Many people want to take advantage of their qualified retirement accounts to leverage them to buy real estate for either an appreciating asset or for the additional monthly income from renting the property. It’s important that you understand the tax and legal ramifications along with the various other difficulties involved with purchasing Cherry Hill real estate within your IRA.

Let’s take that dip into some tips on buying real estate with your IRA in Cherry Hill New Jersey!

Tips on Buying Real Estate With Your IRA in Cherry Hill

Firstly, if you don’t have a self-directed type IRA you will need to find yourself a trusted financial advisor to get a good low fee self-directed IRA.  If you would like we can connect you with some good self-directed IRA companies we know.

Time to Open a Self-Directed IRA

Step one for purchasing investment properties in Cherry Hill within your IRA is to open that ‘self-directed’ IRA we were talking about.  This can be achieved by visiting a qualified financial advisor or other trusted individual to assist you with your IRA.

A fee-only financial advisor can help you set up this account with minimal hassle, while commission-based financial advisors might happen to try to steer you clear or purchasing assets within your IRA ( That person won’t earn much on that investment medium)

Types of Properties Allowable Using IRA & The Rules

You can own a wide variety of homes such as residential, commercial, & industrial structures, and unused land. Savvy investors often purchase parking lots, Storage Unit facilities like Uhaul, and other property types with minimal maintenance.

When you cannot do with an IRA is own any home where you are living or vacationing to. Not even a single night. You can’t trick your way out of this by “renting” the home from your IRA, or to a spouse, child, the grandkids, your parents, or grandparents. You also cant use your IRA to buy a property from any close family.

You can, if you would like to, rent the property to a sibling, your friend, or cousin. One solution that many savvy investors implement is to purchase a home for their IRA, use it to generate income from rent, and upon retirement live in that home.

How Does Real Estate Income Work With An IRA?

Any income that is made with your IRA real estate cannot be used for your”personal current benefit.” This means any money made with the real estate here must remain in the IRA until you retire. If you sell the property then ALL profit must remain inside of your IRA. Any expenses from your Cherry Hill real estate such as property taxes, improvements, insurance, and such must be paid with your IRA funds. In the case that you fail to comply with the imposed rules could mess things up and disqualify your IRA. What that would mean is that you are now subject to income taxes on the entire value of the real estate property as well as (Cha-ching) a 10% early distribution penalty.

It’s very important that you abide by all of the rules associated with an IRA or Roth IRA such as taxation, your required minimum distributions, your beneficiaries, as well as other factors. They don’t change when using a self-directed IRA in purchasing a property.  There can be a huge upside to real estate in your IRA, but it’s best to know exactly what’s in store.

If you have any other questions Omry Gottlib and the Gott Real Estate Team, Realtors at REMAX are always available to assist.


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