Use IRA Funds to Purchase a Future Retirement Home
You vacation at the beach and would love to make it your home when you retire? Did you know you can purchase a retirement home with IRA funds?
The downside is that you can’t live in it until after age 59 ½ , but in the meantime, vacation rental guests can be helping you buy your dream home.
Allow a broker experienced in both real estate sales and vacation rental management help you decide the best property for you. The first step is to transfer your regular or Roth IRA into a self-directed IRA account. It will be overseen by a custodian such as Fiserv or PENSCO Trust Co. With the IRA funds, you can then make a down payment on your dream retirement home. You need to be able to pay all expenses for the retirement home out of the income. With the exception of legal fees, you are not allowed to use non-IRA funds to pay expenses of the home. You can use other IRA funds to pay expenses that come up.
You, your children, your parents, spouse, grand-children and their spouses cannot stay in the home, with or without paying rent. Most other relatives can rent it, though.
You are not allowed to manage the property yourself, so a property management company will be needed.
“It’s a good way to diversify your investments,” says Will Holland, president of San Diego Sunset Vacation Rentals and Real Estate. “Over the long term, real estate always out-performs the stock market. In beach areas, where the land to build is limited, the demand will only go higher.”
