Land Ownership Inside an IRA
Buying Land With a Self-Directed IRA
A self-directed IRA may purchase qualifying land, but the IRA must own the property, pay its expenses, receive its income, and avoid transactions that benefit the owner or other disqualified persons.
Quick Answer
Use a custodian that accepts direct real estate, complete diligence before directing the purchase, title the property in the custodian’s name for benefit of the IRA, and keep all funds and activity within the account.
Before the Purchase
- Confirm the custodian accepts raw land and the proposed ownership structure.
- Review title, survey, zoning, access, utilities, environmental conditions, taxes, assessments, insurance, and development restrictions.
- Document the purchase price, valuation support, closing costs, reserves, and expected holding period.
- Identify every person or entity involved and screen for disqualified-person issues.
Ownership and Expenses
The contract, deed, and closing documents should identify the IRA ownership correctly. Eligible purchase and holding expenses generally must be paid from IRA funds, and proceeds must return to the account. Personal payment of expenses or personal use can create serious compliance concerns.
Personal Use, Services, and Financing
The owner and other disqualified persons generally cannot occupy, vacation on, lease from, or otherwise personally benefit from IRA-owned land. Providing uncompensated “sweat equity,” guarantees, or services may also create risk. If financing is used, obtain advice about nonrecourse structure and potential tax consequences.
Review the IRS prohibited-transactions guidance.
Exit and Liquidity
Land may produce little or no current income while still requiring taxes, insurance, maintenance, legal work, and custody fees. Plan how the IRA will fund expenses, obtain annual valuations, satisfy distributions, and sell or transfer the asset if circumstances change.
Review a Land Investment Structure
Review the current offering materials, confirm accredited-investor eligibility, and discuss account compatibility with your custodian and independent advisers before making a decision.
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Important Information
This content is educational and is not individualized investment, legal, accounting, or tax advice. Mid Atlantic does not act as an IRA custodian and does not determine whether a particular retirement-account transaction complies with tax law. Consult an independent qualified professional and the account custodian before acting. Private placements are unregistered, illiquid, speculative, available only to eligible accredited investors, and involve risk, including possible total loss. Read the current offering documents before investing. Trust metrics are management-supplied and should be reviewed against current company materials.