Can You Buy a House With a Self-Directed IRA?


How you can buy a property with your self-directed IRA or 401(k).

Recently, a client wanted to know if he could buy a property with a self-directed IRA, and if so, what does the process look like? Yes, you can, and the first step is to get a custodian and transfer the funds from your IRA or 401(k) to the custodial company. Your proof of funds will be a letter from the custodian, and you’ll shop for investment properties; you cannot use this house as your primary residence. Then the custodian and your agent will write an offer for the property on your behalf. 

Also, every expense for the house has to come from the IRA or 401(k), so you can’t pay for something like the home inspection with money out of your own pocket. Anyone can take advantage of the opportunity to buy an investment property this way.

“You cannot use this house as your primary residence.”

When working with my client on this, we spoke to a few custodians and chose one that seemed great to work with on this transaction. Afterward, we’ll know if they’ll be good to work with in the future. 

If you’re interested in cashing out your IRA or 401(k) to buy an investment property with no tax consequences, we can help you. If you’d like to get started or have any questions, give us a call or send an email. We can get into the nitty-gritty details and explain how it all works.