Frequently asked questions relating to buying a house with Individual Retirement Account (IRA):

1. Can I use only IRA to buy a house?
2. Can I take out loans from bank with a down payment taking from IRA?
3. Can this house be used for rent?

The answers to all three questions are “yes”. You can buy real estates with self-directed IRA. However, IRS has strict regulations on these questions.

Real estates purchased with IRA funds must be rented. They can neither be used as personal residence nor occasionally be used for rent. Real estates purchased with IRA funds limit your enjoyment of normal tax credit related to investment in real estate. Plus, IRS has a series of requirements and terms of trading prohibition. For example, IRA owned property is not your personal property. IRA must be owned under the supervision of a trust company. This means that regulatory fees must be paid. In the event of a prohibited transaction, the risk is that your IRA will lose your preferential deferred tax. The IRA will default to the full tax on the property. If you are less than 59 and half years old, you will pay a fine of 10% for early withdrawal.