Add foreign property to your portfolio
We get a lot of calls from people asking if they can purchase property in a foreign country through their IRA. The simple answer is yes, but the actual investment is not always so simple. As far as the IRS and your IRA Custodian are concerned, purchasing foreign property is not a prohibited transaction.
Different Countries – Different Rules
However, every country has a different process for how they allow you to purchase property and rules for who can purchase property within their country. It will be the client’s responsibility to do all the research and do their own due diligence to find out what is required for a particular country. For instance, some countries do not allow non-residents or non-citizens to purchase property. Other countries may require you to form a corporation in that country to purchase the property, if you are not a citizen. Remember that with every investment in a foreign country, the degree of risk may be higher than an investment in the United States.
Own it, but DON’T USE IT
Another thing to keep in mind is that you cannot use the property for personal use. IRAs were not created for individuals to buy personal vacation homes. You and any disqualified parties to your IRA, may not stay at the property, even if you or the disqualified parties are willing to pay the same price that a normal guest would pay. It is still a prohibited transaction.
If you have questions about any of this, please contact a CPA or tax professional.