When a self-directed IRA purchases real estate, the funds are paid directly from the IRA, and the property is held as an asset of the account. Because the funds are not distributed to you personally, the purchase itself is not considered a taxable distribution.

All income generated by the property, including rental income, must be deposited into the IRA. Property-related expenses, such as taxes, insurance, maintenance, and repairs, must also be paid using IRA funds.

All transactions must comply with applicable IRS rules, including restrictions involving prohibited transactions and disqualified persons.