PROS and CONS of RE investing in Self Directed IRA

[Christina Lanoux]

Hi, 

I'm hearing a lot of mixed messages about buying real estate in a self directed IRA. I've mostly heard that it's a good strategy but lately I'm hearing that you lose all tax advantages normally allowed. Can someone explain this please?

Scenario: Pre-retirement age; rollover 401k funds to a self directed IRA to buy residential properties.

[Dmitriy Fomichenko]

Christina, you don't lose tax advantages inside of a self-directed IRA. All of the income will be sheltered, that is your advantage. 

If you buy under your own name, you would have to distribute the IRA, pay taxes (and penalties if pulling funds prior to normal retirement age), then what's left you can invest in real estate and get benefits of depreciation deduction.

Don't compare apples with oranges, investing in IRA vs. personally are two different things.