Why Real Estate Investors Love Self-Directed IRAs in 2025

Imagine owning a property that generates rent every month—rent that collects simply and easily into an IRA. As you focus on other things—family, work, friends—that property continues to generate a yield, giving you a hands-off way to invest in retirement. Well, that’s how rental real estate properties within a Self-Directed IRA work. And it may be why so many investors love Self-Directed IRAs in 2025: it’s possible to use the protections of Roth IRAs, for example, to hold retirement real estate assets. But what are the benefits of investing this way, and what should investors know before getting started? Let’s explore.

Real Estate IRA Tax Advantages That Keep More Money in Your Pocket

One of the biggest reasons real estate investors turn to Self-Directed IRAs is the tax-deferred or tax-free growth. With a traditional Self-Directed IRA, for example, rental income and capital gains aren’t taxed until you take distributions in retirement. If you’re using a Self-Directed Roth IRA, you won’t pay taxes on qualified withdrawals at all once you reach retirement age.

That means the rent your properties generate, as well as any appreciation when you sell, stays inside the IRA. They’re compounding over time without annual tax obligations cutting into your returns.

But taxes aren’t the only advantage. Self-Directed IRAs also offer protection from certain liabilities. Since the IRA (not you personally) owns the property, your personal assets stay shielded from lawsuits or creditor claims related to the investment. That can be a huge benefit for investors looking to mitigate their risks.

More Control, More Opportunity with Real Estate IRAs

The idea is simple: Self-Directed IRAs give you the freedom to invest in a wide range of real estate assets. That includes single-family rentals, multifamily units, commercial buildings, and even raw land. You aren’t locked into whatever investments a brokerage firm decides to offer. Instead, you can leverage your expertise in real estate to build a portfolio that fits in the mold you dictate.

Checkbook control is another reason investors love this strategy. With a Checkbook IRA LLC structure, you can write checks directly from your IRA’s dedicated account, making it easier to jump on real estate opportunities without waiting for a custodian’s approval. That speed can be a game-changer in competitive real estate markets.

Key Considerations Before Investing

While the benefits are clear, investing in real estate through a Self-Directed IRA isn’t as simple as buying a property in your name. The IRS has strict rules about prohibited transactions, meaning you can’t personally use or directly benefit from the property. That means no vacationing in an IRA-owned rental or hiring a family member to manage it. Violating these rules can lead to severe tax penalties, so it’s important to work with a knowledgeable Self-Directed IRA custodian.

Financing is another challenge to keep in mind. If you want to use a loan to purchase property within a Self-Directed IRA, it has to be a non-recourse loan—one where the lender can only seize the property itself, not other IRA assets, if there’s a default. These loans can be harder to secure and often come with higher interest rates than conventional mortgages.

Is a Self-Directed IRA Right for Your Real Estate Strategy?

For investors who want to diversify their retirement savings beyond the stock market, a Self-Directed IRA offers a powerful way to grow wealth through real estate. The tax advantages, asset protection, and investment flexibility make it an attractive option—especially for those who already have experience in real estate.

Interested in learning more? Reach out to us here by dialing 866-7500-IRA.