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Can I Take a Loan From My IRA to Invest in Real Estate?

At 1031 Exchange Place, we understand the importance of making informed decisions when it comes to investing in real estate. While Individual Retirement Accounts (IRAs) are popular vehicles for long-term investment, it’s important to clarify the rules and regulations surrounding them.

In general, you cannot take a loan directly from your IRA to invest in real estate. Traditional and Roth IRAs are designed for long-term savings and do not permit loans from the account. Withdrawals made before age 59½ are typically subject to income tax and a 10% early withdrawal penalty, which can significantly impact your overall investment strategy.

However, there are alternative options for using your IRA to invest in real estate. One such option is setting up a self-directed IRA, which allows greater flexibility in investment choices, including real estate. In this case, the real estate investment would be purchased and held directly by the self-directed IRA, not by you as an individual. It’s important to work with a knowledgeable custodian to ensure that you’re following all IRS guidelines and maintaining the tax-advantaged status of your IRA.

If you’re considering real estate investment as part of your overall strategy, 1031 Exchange Place can help. We specialize in facilitating tax-deferred 1031 exchanges, which allow you to defer capital gains taxes on the sale of investment properties when you reinvest the proceeds in qualifying replacement properties. This can be a powerful tool for building wealth through real estate, while also preserving your retirement savings.

Please consult with your financial advisor or tax professional to determine the best course of action for your specific situation. Our team at 1031 Exchange Place is available to answer any questions you may have and guide you through the 1031 exchange process.