Tax Write Offs For Real Estate Investors

Tax Write Offs For Real Estate Investors

Here is information on tax write offs for real estate investors and using an IRA. It appears that everywhere you look someone is telling you to set up a self directed IRA and invest in real estate. So you might be wondering is this a clever thing for you to do?

The answers to that are yes and maybe not.

Yes, you may use your IRA and tap into your experience as a real estate investor to build a large amount of cash inside your IRA for your retirement.

However, since the restrictive rules governing your IRA creating a minefield of tax traps and one misstep can disqualify your IRA causing you to have to pay all the taxes, interest and penalties due.

Generally, some of the tax write offs for real estate investors include:

  • Insurance
  • Mortgage interest
  • Furniture
  • Repairs  and maintenance
  • Cleaning
  • Professional fees
  • Management fees
  • Interest and charges
  • Ground/land rent
  • As well as other specific costs

Real Estate Tax-Write-Offs and IRA

Here are only a couple of the tax traps to consider before utilizing your IRA or paying any write-offs.

    1. You can’t invest your IRA in the same property as a related party has invested their IRA. This runs afoul of the related party rule which prohibits you from conducting business with your partner, son, daughter, mother or father.
    2. 2. As the IRA owner you can’t use any asset of the IRA for your personal benefit. In order that vacation condominium your IRA purchased and rents out, you cannot stay in it in the off season.
    3. 3. You can’t use IRA money to assist you to acquire a property. Like utilizing a large chunk of the IRA as a down payment to assist you to get a better loan.
    4. 4. Your IRA needs to get a mortgage to acquire a property. That is no problem so long as it’s a non recourse loan. The definition of non recourse will be that the mortgage company can’t look to you and your assets to secure the loan in any way. The property is the sole and exclusive collateral.
    5. 5. Your IRA rental property has been vacant for some time and your IRA is out of cash to pay the mortgage and insurance, etc. You can’t pay any one of the IRAs expenses out of your very own pocket. Either you add a contribution to your IRA or the IRA may have to borrow some money from somewhere.


Here’s a nasty tax surprise: Selling an IRA property with a current mortgage creates Debt Financed Income which the profit-robbing tax called Unrelated Business Income Tax How bad is it?

On $9,750 profit from the sale of the property the tax is 35% – OUCH.



Now do not be discouraged utilizing your retirement pension to invest in real estate is a great idea.

It’s just your IRA isn’t real estate friendly, the solution is a better more flexible plan that will not have the same constraints and paradise forbid penalties.

To conclude, if you do decide to go ahead and invest your IRA in real estate do so with a thorough knowledge of the rules.

Additionally, be sure to constantly work with a professional who can guide you these murky waters and claim back all additional tax write offs for real estate investors.


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