Real Estate In Retirement Accounts

Real Estate In Retirement Accounts

Did you know that retirement accounts, especially self-directed traditional and Roth IRAs, can own real estate?  This provides diversification instead of just stocks, bonds and mutual funds in your retirement account.  REIT’s, both public and private, can be put into retirement accounts.  Public REITs can be bought through your regular stock broker, but 1031Replace.Com can assist you with private REITs (see REITs section of this website).

But you can also put other kinds of real estate, including TIC’s in retirement accounts if there are sufficient funds in the account to accommodate such an investment (TICs have minimums which are usually higher than REITs).  For TIC’s and other real estate investments in retirement accounts, please see the Entrust (www.EntrustAdmin.com) and Pensco Trust (www.Pensco.com) websites.  By the way, mortgages on real estate placed in retirement accounts must be non-recourse.  This is not an issue with public and private REIT’s, however, because there is no direct ownership of the underlying real estate.  TICs generally come pre-packaged with a mortgage component which is almost always non-recourse, so TICs are definitely a candidate for retirement accounts.  However, they may be subject to unrelated business income tax (UBIT) if there is a mortgage.

Many TIC offerings include an LLC or LP offering in the same property for non-1031 and retirement account investors since the TICs are designed primarily to be replacement properties in 1031 Exchanges.  The minimum investment for LLC or LP units is usually lower than TICs.  Minimums for LLC and LP units usually range from $25,000 to $100,000.