Invest in Real Estate with Your IRA – Rental Income, Tax-Deferred, Fully Self-Directed

Real estate is one of the most powerful assets you can hold in a self-directed IRA. Your IRA buys the property. Your IRA collects the rent. Your IRA receives the proceeds when you sell. And throughout all of it, your gains grow tax-deferred — or tax-free if you use a Roth IRA.

uDirect IRA has been helping self-directed investors hold real estate in their retirement accounts since 2009. We’re headquartered in Irvine, California, and we’ve custodied everything from single-family rentals to raw land, commercial properties, and real estate notes. When you’re ready to make a move, we’re ready to help you do it right.

A Real Estate IRA is a self-directed IRA that holds real property as its investment. Rather than stocks, bonds, or mutual funds, your retirement account owns real estate — and all the income and appreciation that comes with it accumulates inside your tax-advantaged account.

You can use a Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, or Solo 401(k) to hold real estate. The account type determines your tax treatment — Traditional accounts grow tax-deferred, Roth accounts grow tax-free.

uDirect IRA acts as your custodian — we hold the account, process transactions, and ensure your investments are properly titled and documented. You make the investment decisions. We handle the administrative infrastructure to keep your account IRS-compliant.

Real estate investors who discover the self-directed IRA often wish they had found it sooner. Here’s why:

• Tax-deferred growth — rental income and capital gains accumulate inside the IRA without triggering an immediate tax liability
• Tax-free growth — if you use a Roth IRA, all gains are completely tax-free at qualified withdrawal
• Diversification — real estate operates independently from stock market volatility, providing balance to a retirement portfolio
• Inflation hedge — property values and rental income historically rise alongside the cost of living
• You invest in what you know — real estate investors who understand local markets can put that expertise to work in their retirement accounts
• Passive income — rental income flows back into the IRA and compounds over time

uDirect IRA can facilitate a wide range of IRS-allowable real estate investments. Eligible assets include:

• Single-family homes
• Multi-family properties — duplexes, triplexes, apartment buildings
• Commercial real estate — office, retail, industrial
• Raw land and undeveloped lots
• Condos and townhomes
• Mobile homes (must be attached to a permanent foundation)
• Real estate notes and second mortgages
• Partial notes
• Real estate purchase options
• Tax lien certificates

This is not an exhaustive list. If you have a specific investment in mind that isn’t listed here, contact us — we can tell you whether it qualifies.

Real estate IRAs come with IRS rules that are strictly enforced. Understanding them before you invest protects your account’s tax-advantaged status and keeps you out of trouble. Here are the most important:

1. You Cannot Buy Property You Already Own
Your IRA cannot purchase property that you personally own, or that is owned by a disqualified person — including your spouse, parents, children, or any entity you control. This is a prohibited transaction and can result in account disqualification.

2. You Cannot Use the Property Personally
IRA-owned real estate is for investment purposes only. You cannot live in it, vacation in it, or allow disqualified persons to use it — even temporarily. The property must be arm’s length from you and your family.

3. All Expenses Must Be Paid from the IRA
Property taxes, insurance, repairs, maintenance, and management fees must all be paid from the IRA’s funds — not your personal accounts. Paying any IRA property expense personally is a prohibited transaction, even if you plan to reimburse yourself later.

4. All Income Must Return to the IRA
Rental income, sale proceeds, and any other income generated by IRA-owned real estate must flow directly back into the IRA. Depositing rental income into your personal account — even briefly — creates a prohibited transaction.

5. The Property Must Be Titled in the IRA’s Name
IRA-owned real estate must be titled in the name of the IRA, not in your personal name. The title typically reads something like: ‘uDirect IRA Services FBO [Your Name] IRA.’ uDirect will provide the correct titling language for your transaction.

6. Financing Triggers UBIT
If your IRA uses a non-recourse loan to purchase real estate, the debt-financed portion of the income is subject to Unrelated Business Income Tax (UBIT). This doesn’t eliminate the benefit of leveraged real estate in an IRA, but it does change the tax math. We recommend consulting a tax advisor before using financing inside an IRA.

1. Open your self-directed IRA at uDirect. If you don’t already have an account, contact us to get started. We’ll help you choose the right account type — Traditional, Roth, SEP, SIMPLE, or Solo 401(k).
2. Fund your account. Roll over funds from an existing IRA or 401(k), make a contribution, or transfer from another custodian. uDirect will guide you through the process.
3. Identify your property. Find the real estate you want your IRA to purchase. Conduct your due diligence — uDirect does not evaluate investments or provide investment advice.
4. Submit the investment direction. Complete uDirect’s investment direction paperwork. This authorizes us to initiate the purchase on behalf of your IRA.
5. Title and close. The property closes in the name of the IRA, not your personal name. uDirect coordinates with the title company to ensure proper titling.

Manage through the IRA. All rental income comes into the IRA. All expenses go out of the IRA. uDirect processes the transactions and keeps your account records current.

Kaaren Hall founded uDirect IRA in 2009 because she saw a gap in the market. Real estate investors — people who understood leverage, cash flow, and long-term appreciation — had no good option for putting that expertise to work in their retirement accounts. Traditional custodians didn’t understand alternative assets. Those that did were slow, expensive, and hard to reach.

uDirect was built to be different. Flat fees, no percentage-of-assets pricing. Real people who answer the phone. A team that understands real estate transactions because they’ve processed thousands of them.

Today, uDirect administers over $1 billion in assets. A significant portion of that is real estate — residential, commercial, notes, and land, held across hundreds of self-directed accounts. Kaaren serves on the Board of Directors of the Retirement Industry Trust Association (RITA) and is the author of the BiggerPockets Guide to Self-Directed IRA Investing. She founded the Orange County Real Estate Investors Association (OCREIA).

When you open a Real Estate IRA at uDirect, you’re working with a custodian that has been doing this since 2009 and has seen every kind of real estate transaction an IRA can hold.

Can I buy a rental property with my IRA?
Yes. A self-directed IRA at uDirect can purchase rental properties — single-family homes, multi-family buildings, commercial properties, and more. The IRA owns the property, collects the rent, and pays the expenses. All income and gains accumulate inside the tax-advantaged account. You make the investment decisions; uDirect handles the custodial paperwork.

Can I use my IRA to invest in real estate without buying a property outright?
Yes. In addition to direct property ownership, your IRA can invest in real estate notes (where your IRA acts as the lender), tax lien certificates, real estate purchase options, and partial notes. These allow real estate exposure without the operational responsibilities of property ownership.

Can my IRA get a mortgage to buy real estate?
Yes — but only through a non-recourse loan. A non-recourse loan is secured only by the property itself, not by your personal credit or other IRA assets. Standard mortgages are recourse loans and are not permitted inside an IRA. Non-recourse lenders who work with self-directed IRAs do exist, but rates and terms are typically less favorable than conventional mortgages. Additionally, debt-financed real estate income is subject to UBIT — consult a tax advisor before using leverage inside your IRA.

Can I personally do repairs or improvements on IRA-owned property?
No. You cannot perform labor, provide materials, or personally contribute to improvements on property owned by your IRA — even if you don’t charge the IRA for your time. The IRS considers this a contribution of personal services, which is a prohibited transaction. All work on IRA-owned property must be performed by independent third parties and paid from the IRA.

What happens when I want to sell IRA-owned real estate?
When your IRA sells a property, the proceeds flow back into the IRA — not to you personally. If you have a Traditional IRA, the gains are tax-deferred until withdrawal. If you have a Roth IRA, the gains may be completely tax-free. uDirect processes the sale transaction and receives the funds on behalf of your account.

Can I eventually take the property as a distribution?
Yes. When you reach retirement age, you can take IRA-owned real estate as an in-kind distribution rather than selling it first. The property is transferred to you personally and its fair market value at the time of distribution is treated as taxable income for Traditional IRAs. For Roth IRAs, qualified distributions may be tax-free. You would need a current appraisal to establish the fair market value at distribution.

What is the 10% holdback rule?
When your IRA purchases real estate, uDirect requires that 10% of the property value remain in your IRA as a liquid reserve to cover ongoing expenses such as property taxes, insurance, repairs, and maintenance. This requirement replaced the old $500 minimum deposit standard. The holdback may be waived if you have alternate qualified funding sources available. Our Transaction Department will walk you through the specifics for your transaction.

How long does it take to close a real estate purchase through an IRA?
Real estate transactions through a self-directed IRA take longer than personal purchases because of the custodial layer involved. The exact timeline depends on your transaction type, how quickly paperwork is completed, and coordination with the title company. Contact uDirect early in your process — the sooner we’re involved, the smoother the closing.

uDirect IRA has been helping investors hold real estate in their retirement accounts since 2009. Whether you’re buying your first rental property with IRA funds or adding real estate to an existing self-directed account, we’re ready to help you do it right.

Email us at info@uDirectIRA.com or call us toll-free at (866) 447-6598. A real person will answer.