Yes, if you do it right. Using an IRA for real estate requires a special Self-Directed IRA. Your Self-Directed IRA at Charles Schwab or Fidelity does NOT permit you to hold real estate or any asset other than securities.
This can be solved by moving your IRA to a custodian that allows for real estate in the plan document. With the right Self-Directed IRA (known as Real Estate IRA) and proper structuring, you partner with your IRA to buy leveraged real estate.
When it comes time to sell, you can 1031 your portion of the gain while the IRA gets its portion of the gains tax exempt. For more information on how you can use an IRA to purchase real estate please visit www.MyRealEstateIRA.com.