Can you buy a rental house with money that is IRA money and not have to pay taxes on it?

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The IRA is probably the better investment.The maintenance expenses are far less, so your return will be greater.

Maybe this is not what you wanted, but possibly you could invest the IRA or a part of it into a REIT.You would still pay taxes when you withdrew the money if it was a traditional IRA, though.

no to both parts of your question

You mean not have to pay the early withdrawal penalty?Not for an investment property but you could withdraw up to 10K (20k is you are a couple) to buy a first home.If you withdrew the money, bought the home, lived in it a short time and then decided to rent it that is legal.

You will also have to pay tax on the withdrawal as income but if you have rental property deductions in the same year those would offset the added taxes.

Kinda tricky to do this and not get in trouble but it can be done (with the above limitations) if you do it right but may be best just to pay the 10% early withdrawal fee (if this applies) and offset tax from the extra income with deductable costs on your investment property (deductible costs include most repairs, mortgage interest, depreciation, etc).

If you own a house, you have to pay taxes on it. Period.

If you had income, you have to pay taxes on it. Period.

No. If that's what you want to do, you should talk to a financial advisor about the possibility of having a self-directed IRA that can invest in real estate.Even if you take money out as a first time home buyer, you have to pay taxes on it. You just don't have to pay the penalty (up to 10k).

It can be done, but it is not recommended.

1)When you eventually withdraw money in the IRA, it is taxed as ordinary income.If you sell a rental property that is not in an IRA, your gain is taxed as Capital Gain (lower rates)

2)Rental property that is not in an IRA generates a deduction for depreciation for the owner.If it is in an IRA, it does not.

3)You can't do anything with the rental property yourself.You can't do repairs.You can't interview tenants.Even changing a light bulb on your own wouldn't be allowed.

4)Self-directed IRAs can be quite expensive to set up.

If I remember correctly, there were a few other reasons as well but those are the 4 off of the top of my head.

it's tricky and likely not worth it.The IRA can't be obligated on any debt whatsoever, so you can't finance with a mortgage.For the same reason, an IRA generally can't be a partner in any enterprise.

Doesn't mean it can't be "close" to done -- and it also requires an independent fairness opinion as to the worth of the investment.

you need more professional advice than I'm able to give ... i suggest an attorney.Perhaps s/he can suggest a structure that allows you to use IRA money for most of the down payment while the risk of loss and liability for the mortgage is on you.

The government will get their money:if tax wasn't paid on contributions, it will be collected on withdrawals.