How to Buy Real Estate with Your 401(k) or IRA | Use Retirement Funds to Build Wealth Tax-Free

Why Maxing Out Retirement Accounts Still Matters

If you have a 401(k) through your employer or you’re contributing to an IRA, there’s a simple baseline move you should be making: max those contributions out. And ideally, you should be using a Roth IRA as part of that strategy. The reason is pretty straightforward — retirement accounts are still one of the most protected, tax-advantaged ways to build wealth over time.

But what a lot of people don’t realize is that retirement accounts don’t have to be limited to regular Wall Street investments.

Yes, You Can Use Retirement Money to Invest in Real Estate

A common question comes up: “Isn’t there a way to use my retirement accounts to invest in real estate?”
Yes — absolutely.

For many people, the opportunity shows up when they change jobs. They end up with what are basically “orphan” 401(k)s — old employer plans sitting there with money that isn’t actively doing much. A lot of times people roll those into a regular IRA and stop there.

But there’s another step you can take once you’re no longer tied to a company plan.

What a Self-Directed IRA or 401(k) Actually Does

When you don’t have a company IRA/401(k) anymore — or you’ve moved on from an employer plan — you can open what’s called a self-directed IRA or a self-directed 401(k).

Here’s the structure:

• You go to a trustee.
  
  
• That trustee becomes your custodian.
  
  
• And now you get to decide how your retirement money gets invested.
  
  

Instead of only picking from pre-packaged funds, you can:

• buy stocks
  
  
• buy mutual funds
  
  
• buy real estate
  
  
• loan money out
  
  
• invest in private capital deals
  
  

That gives you a much wider playing field.

How Private Capital Fits Into This

A big slice of private capital in real estate comes directly from self-directed retirement accounts.

People move money out of CDs or old retirement plans into self-directed structures, and then they lend into real estate projects — construction, fixed-rate debt, flips, and more. Instead of parking money inside low-return instruments or handing it to massive banks, they’re lending directly into tangible deals.

It’s a way for retirement money to work harder without being stuck inside the usual “only Wall Street” lane.

The Main Benefit: Control + No Middlemen

The biggest advantage of self-directed accounts is power and control.

When you self-direct, you aren’t paying a big asset management fee to someone bundling your investments into opaque packages. You can actually see where your money is going and why.

You decide if you want to:

• hold the S&P 500
  
  
• allocate to real estate
  
  
• lend into private capital
  
  
• balance risk across multiple buckets
  
  

And because you’re closer to the investment itself, you’re also keeping more of the return.

The Tax Advantage in Real Estate Is a Big Deal

The tax benefit is where self-directed real estate gets seriously interesting.

Example: imagine buying a property for $140,000. Over 30–40 years, it grows into $1.4 million. If that property is held inside a retirement account structure where gains are shielded, that appreciation can become tax-free growth.

Compare that to owning personally:

• if you’re married and owner-occupied it, you only get a $500,000 capital gains exclusion
  
  
• if you didn’t owner-occupy it, you could owe around 20% on the gain
  
  
• on a million-plus gain, that’s hundreds of thousands of dollars lost to taxes
  
  

Self-directed retirement real estate flips that math in your favor.

The Big Takeaway

Self-directed IRAs and self-directed 401(k)s are some of the strongest tools available for people who want more control over their wealth building.

They open the door to real estate investment, private lending, and non-traditional plays — while preserving the tax advantages that make retirement accounts powerful in the first place.

If your goal is to grow retirement money beyond the standard 6–8% stock trajectory, self-directing gives you a legal, structured way to do that — without relying on middlemen to decide your financial future.