Stock market funds to rental property investment

[Matthew Curley]

Does anyone know if you can pull money out of the stock market to buy a real estate investment property and avoid capital gains taxes, similar to a 1031 exchange?

[Chad Duncan]

What I understand is that you can open a self-directed IRA (SDIRA), transfer funds from a Traditional IRA into it (called a direct rollover). Once it's transferred, you can then liquidate what's in the SDIRA to purchase an investment property. Going the SDIRA route means that you cannot take any distributions from the SDIRA without incurring penalties (unless your age is 59 and 1/2), and you fall under the contribution limits ($6,000 for 2021 unless you're over 50 which becomes $7,000). As long as you aren't going to need any of the rental income, you have a sizeable IRA balance, and you have an expert on your side, it might be worth looking into. I would recommend you talk with an advisor who does this regularly and understands it at an expert level, which I am not, at the moment.