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Can I Live In A Property Owned By My IRA?

At 1031 Exchange Place, we are dedicated to helping our clients navigate complex financial and real estate transactions. When it comes to living in a property owned by your Individual Retirement Account (IRA), it is important to understand the regulations set forth by the Internal Revenue Service (IRS) to avoid any penalties.

In general, you cannot live in a property owned by your IRA. According to IRS rules, IRAs are designed to be used as tax-advantaged investment vehicles, with the intent to grow your retirement savings. Using IRA-owned property for personal use or immediate benefit is considered “self-dealing” and is not allowed.

The IRS specifies that any property owned by your IRA must be for investment purposes only, meaning it cannot be used for personal residence, vacation home, or any other personal use. Violating this rule can lead to severe tax consequences and penalties, including disqualification of your IRA and immediate taxation of the entire account.

However, you may invest in real estate through your IRA and rent the property to generate income for your retirement account, as long as you or any disqualified persons (including your spouse, ascendants, descendants, and any entities controlled by you or disqualified persons) do not reside in the property or use it for personal purposes.

If you are considering investing in real estate with your IRA, it is crucial to consult with a financial advisor or a tax professional who is familiar with the specific rules and regulations governing IRAs and real estate investments. They can help you navigate the complex regulations and ensure your investments are structured to comply with IRS requirements.