Using an IRA for real estate requires a special Self-Directed IRA. Your Self-Directed IRA at say Charles Schwab probably does NOT permit you to hold real estate or any asset other than securities. This can be solved by moving your IRA to a custodian that allows for real estate in the plan document. With the right Self-Directed IRA  and proper structuring, you partner with your IRA to buy leveraged real estate. When it comes time to sell, you can 1031 exchange your portion of the gain while the IRA gets its portion of the gains tax exempt.  You can buy raw land, rental properties, commercial real estate, and even a piece of a larger multi-million dollar property called a tenant-in-common TIC investment.   The advantages of real estate in a retirement plan are its potential high rate of return, added diversification and its lower risk over the long run.

Perhaps the biggest drawback to investing in real estate for a retirement account is the loss of the depreciation deduction. It’s useless inside a retirement account.  Again, using 1031 exchange, when it comes time to sell, you can 1031 exchange your portion of the gain while the IRA gets its portion of the gains tax exempt.  

If you have any questions about IRAs in real estate or buying or selling Lake of the Ozarks real estate, you can always contact John Garrett at 573-302-2320 or e-mail me for a fast response.