Yes. A self directed IRA can purchase real estate. It must be strictly investment property though. No personal use allowed. And, you cannot sell a property that you already own to your IRA. (Sorry) You must purchase it through your IRA.
This can be a great way to not only diversify your IRA, but to add value as well. Example: If you purchased a $ 100,000 house with your IRA funds and then leased the property to a tenant for $ 1,200 per month, you would have a 14% cap rate. After taxes, management and insurance your likely cash return would be an impressive 10% annually!
Additionally, you still own the real estate. You can touch it, feel it, see it. And in ten years, factoring a mere 4% annual appreciation rate, your base investment would have grown to nearly $150,000!
So to recap: That would be a 10% annual return, plus a nearly 50% increase in value over a 10 year period. Restrictions apply, so check with your CPA or Financial Planner or tax professional first.
For information on short sales, bank foreclosures and general real estate topics, please visit www.FloridaBrokers.com or email us at smith@realtor.com