--- title: What are the IRS rules for holding/managing directly owned real estate? description: Directly owned real estate held in your self-directed retirement account must comply with IRS regulations under IRC §4975. These rules are designed to ensure the property is held strictly for investment purposes and not for personal benefit. --- [Skip to content](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#main-content) [![STRATA\_2c\_dark-Jan-30-2026-08-39-57-4702-PM](https://knowledge.stratatrust.com/hs-fs/hubfs/STRATA_2c_dark-Jan-30-2026-08-39-57-4702-PM.png?width=328&height=111&name=STRATA_2c_dark-Jan-30-2026-08-39-57-4702-PM.png)](https://www.stratatrust.com/) Open main navigation Close main navigation - [Log In](https://www.stratatrust.com/log-in/) [Log In](https://www.stratatrust.com/log-in/) How can we help you today? - There are no suggestions because the search field is empty. 1. [Self-Directed Knowledge Center](https://knowledge.stratatrust.com/?hsLang=en) 2. [Investment Options](https://knowledge.stratatrust.com/investment-options?hsLang=en) 3. [Real Estate (Directly Owned)](https://knowledge.stratatrust.com/investment-options?hsLang=en#real-estate-directly-owned) # What are the IRS rules for holding/managing directly owned real estate? Directly owned real estate held in your self-directed retirement account must comply with IRS regulations under **IRC §4975**. These rules are designed to ensure the property is held strictly for investment purposes and not for personal benefit. --- **Quick links**: [Prohibited transactions](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Prohibited) | [Income & expenses](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Income) | [Property management](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#PropertyMgMt) | [Valuations](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Valuation)  --- ### Prohibited transactions IRS rules prohibit the accountholder and any [disqualified persons](https://knowledge.stratatrust.com/what-is-a-prohibited-transaction?hsLang=en) from using or benefiting from the property in any way while it is held in a tax-advantaged retirement account. The property must be held for investment purposes only. - You may not buy from, sell to, or otherwise transact with yourself or a disqualified person, including a spouse, lineal ascendants (parents or grandparents), lineal descendants (children, grandchildren, or their spouses), or a business you own or control. - You or a disqualified person may not live in, vacation in, or otherwise use the property - You or a disqualified person may not perform work on the property, including repairs, maintenance, or improvements - You or a disqualified person may not receive compensation or any other benefit for managing the property --- **Quick links**: [Prohibited transactions](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Prohibited) | [Income & expenses](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Income) | [Property management](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#PropertyMgMt) | [Valuations](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Valuation)  --- ### Income and expenses All income and expenses related to the property must flow through your self-directed account.  Income - Rental income must be deposited directly into your STRATA account using the [Deposit Certification](https://www.stratatrust.com/resources/forms/deposit-certification) form. - If rental income is received by the renter directly by STRATA, they must clearly identify the STRATA account and the investment property the income should be applied to. Expenses - All expenses (taxes, insurance, improvements, debt payments, etc.) must be paid from your STRATA account. You may not pay expenses out-of-pocket or with a personal credit card. - To avoid any processing delays, ensure your STRATA account maintains sufficient uninvested cash to cover all property-related expenses. - To process payments, submit supporting documentation (such as invoices or tax notices) along with a completed Expense Payment Authorization form. --- **Quick links**: [Prohibited transactions](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Prohibited) | [Income & expenses](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Income) | [Property management](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#PropertyMgMt) | [Valuations](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Valuation)  --- ### Property management STRATA does not provide property management services. You are responsible for selecting and overseeing an independent third-party property manager, who handles day-to-day operations, including rent collection and property maintenance.  - If your property manager collects rent and pays expenses, the remaining proceeds should be sent to STRATA at least quarterly, along with an itemized accounting of income received and expenses paid. --- **Quick links**: [Prohibited transactions](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Prohibited) | [Income & expenses](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Income) | [Property management](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#PropertyMgMt) | [Valuations](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Valuation)  --- Insurance requirements If you carry liability insurance on the property: - The insured must be listed as: **STRATA Trust Company Custodian FBO (Accountholder Name)** - Premiums must be paid directly from your STRATA account - The property cannot be added to your personal insurance policy --- **Quick links**: [Prohibited transactions](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Prohibited) | [Income & expenses](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Income) | [Property management](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#PropertyMgMt) | [Valuations](https://knowledge.stratatrust.com/irs-rules-for-directly-owned-real-estate#Valuation)  --- ### Valuation requirements The IRS requires an updated fair market value (FMV) for each real estate asset: - Annually *and* for any taxable event (e.g., in-kind distribution or Roth conversion) - Supporting documentation is required Additional guidance: - Approved third-party websites (e.g., Zillow, Realtor.com, Redfin) may be accepted for annual updates. Learn more about [annual requirements and timelines.](https://knowledge.stratatrust.com/what-are-the-annual-requirements-for-directly-owned-real-estate-fmvs?hsLang=en) - If the value changes significantly (typically 50% or more) and/or for any taxable event, a signed formal valuation from a qualified real estate professional (broker or appraiser) is required. - County tax appraisals are not accepted for any valuation updates. - Valuation fees (if applicable) must be paid from your STRATA account using an Expense Payment Authorization form. --- #### Key reminder All aspects of the investment — ownership, income, expenses, and documentation — must remain separate from your personal finances to maintain the tax-advantaged status of your self-directed retirement account. - [Manage Your STRATA Account](https://knowledge.stratatrust.com/manage-your-strata-account?hsLang=en#main-content) - [Online Account Access](https://knowledge.stratatrust.com/manage-your-strata-account?hsLang=en#online-account-access) - 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[Conversion & Recharacterization](https://knowledge.stratatrust.com/funding-transfers?hsLang=en#conversion-recharacterization) - [Distributions & Withdrawals](https://knowledge.stratatrust.com/distributions-withdrawals?hsLang=en#main-content) - [Cash Distribution](https://knowledge.stratatrust.com/distributions-withdrawals?hsLang=en#cash-distribution) - [Distribution (In-Kind)](https://knowledge.stratatrust.com/distributions-withdrawals?hsLang=en#distribution-in-kind) - [Precious Metals Distribution - Liquidation Required](https://knowledge.stratatrust.com/distributions-withdrawals?hsLang=en#precious-metals-distribution-liquidation-required) - [Delaware Depository](https://knowledge.stratatrust.com/distributions-withdrawals?hsLang=en#delaware-depository) - [Texas Precious Metals Depository](https://knowledge.stratatrust.com/distributions-withdrawals?hsLang=en#texas-precious-metals-depository) - [Tax Considerations](https://knowledge.stratatrust.com/distributions-withdrawals?hsLang=en#tax-considerations) - 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