IRAs are allowed to hold real estate as an investment, but IRA custodians aren’t required to let an investor include real estate in his account. Taxpayer Guy Dabney learned this lesson the hard way, and his experience may be of value when dealing with clients who wish to hold alternative investments inside a retirement account.

The lesson came down in a Tax Court ruling earlier this year. Dabney had rolled IRA funds into an existing self-directed IRA he had with Charles Schwab, and he decided he wanted to invest in undeveloped land in Utah.

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