How to Use Your IRA to Buy Real Estate in Portland – Part 2

If you’re looking to grow your real estate portfolio in Portland, one powerful but often overlooked strategy is using a Self-Directed IRA (SDIRA). Many investors are now turning to SDIRAs as a tax-advantaged way to diversify their retirement accounts and gain exposure to the steady, long-term growth potential of real estate.

In this blog post, we’ll break down how to use your IRA to invest in Portland real estate, the rules you must follow, the pros and cons, and what you need to do to get started.

So lets dive in!

Why Real Estate in a Self-Directed IRA?

Most traditional IRAs are limited to stocks, bonds, and mutual funds—what financial institutions typically offer. But with a self-directed IRA, you get control over where your money goes. That includes alternative assets like real estate, private lending, precious metals, and more.

Using an SDIRA to buy local real estate in Portland could help you:

• Diversify your retirement portfolio beyond traditional markets

• Build long-term wealth through appreciating assets and passive income

• Benefit from tax-deferred or tax-free growth (depending on whether your IRA is Traditional or Roth)

• Maintain more control over your investments

Key Considerations Before You Get Started

Before diving in, it’s essential to ask yourself a few questions:

• Is real estate a good fit for my long-term retirement goals?

• Do I have enough capital in my IRA to cover the purchase and ongoing expenses?

• Am I willing to comply with IRS rules to maintain tax-advantaged status?

If the answer is yes, here’s what you need to know.

Important Rules for Buying Real Estate with Your IRA

When using your self-directed IRA to buy property in Portland, Oregon, you need to follow some strict IRS guidelines to stay compliant:

1. No Self-Dealing:

   • You cannot buy or sell property to yourself or any disqualified person (spouse, parents, children, etc.).

   • You cannot use the property personally—no vacation homes or primary residences.

2. The IRA Must Own the Property:

   • The title must be in the name of your IRA (e.g., XYZ Trust Company FBO Your Name IRA).

   • All expenses and income must flow through the IRA account—not your personal bank.

3. No Mortgages (Usually):

   • Most SDIRA real estate purchases must be made in cash using funds from the IRA.

   • If financing is used, it must be non-recourse, and income from leveraged property may be subject to UBIT (Unrelated Business Income Tax).

4. All Expenses Are Paid by the IRA:

   • Property taxes, repairs, insurance, and property management fees must come from your IRA account balance.

5. Flipping Property is Tricky:

   • You can flip properties, but if it becomes frequent, the IRS may consider it “business activity,” which could lead to taxes and penalties.

   • There may be a limit to how many properties you can flip annually within your IRA.

How to Use Your IRA to Buy Real Estate in Portland

It is possible to buy rental property with an IRA, but you must open a custodial account then transfer money into it. It’s a simple process that we can help you out with. Just give us a call at (503) 893-9107 and we can walk you through the process.

There are many rules associated with this type of transaction, so be sure you understand and agree to them before you buy. It is also possible to buy a home for the purpose of “flipping” it, but only if you are in the flipping business.

Furthermore, there is a limit to the number of flipped properties you can purchase in one year in Portland with your self directed IRA.

Again, the best course of action is to determine the rules for the process to make sure you can live with them.

SD IRA Investing Limits

The rules that govern these types of investments do not allow a traditional mortgage with an IRA.

Instead, you need to have enough money in your IRA to make the purchase. There are costs associated with administering the IRA, so you must make sure that your IRA has enough money in it to cover those expenses too.

Again, if you don’t already have a great self directed IRA custodian… reach out to us and we can connect you with the ones we know of who are very real estate friendly. Just give us a call at (503) 893-9107 or shoot us an email through our Contact form and say “I’m looking for SD IRA resources for buying Portland investment properties”… and we’ll get back to you right away.

Basic Rules of Investing (even with real estate)

There are many rules in investing that can help you determine a good purchase from a bad one. One of the most important is to diversify your portfolio.

As tempting as a real estate purchase might be in Portland, it’s a good idea to follow this advice when using your IRA to make a purchase. Just as is the case with any big investment, it’s always a good idea to check with a qualified financial adviser before you make a purchase to get an independent view of the long term as well as the short term outlook.

In the end, using your IRA to invest in local Portland Oregon investment properties can be a great route.

It helps you grow your portfolio using real estate with the tax benefits of the IRA.

If you’re looking for investment properties here in Portland join our PDX Home Buyers Preferred Property Buyers List through the link below.

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