Can real estate be held in an Individual Retirement Account (IRA)?

Real estate can indeed be held in an Individual Retirement Account (IRA), which is why the answer that states "Yes, it can" is considered correct.

The Internal Revenue Service (IRS) permits certain forms of real estate investment within a self-directed IRA, provided that the transactions comply with specific regulations. For example, an investor can purchase rental properties, raw land, or commercial properties within the IRA. However, it's important to note that the investment must be an income-generating property to adhere to the rules governing IRAs. Furthermore, personal use of the property is strictly prohibited while it is held in the IRA, and all expenses related to the property (like maintenance and management fees) must be paid from the IRA itself.

While the possession of real estate in an IRA is allowed under the right conditions, there are specific restrictions and rules to ensure compliance with IRA regulations. It’s essential for individuals considering this investment approach to seek professional advice from a tax advisor or financial planner to navigate the complexities involved.

Other options like prohibiting real estate entirely or only allowing it through specific types like REITs (Real Estate Investment Trusts) or restricting it to primary residences do not accurately reflect current IRS regulations concerning self-directed IRAs.