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Fundamento

Self-directed IRAs and real estate

A self-directed IRA can hold real estate directly. The structure preserves tax deferral on rental income and gains, but introduces several traps: no personal use, no related-party transactions, no sweat equity, and unrelated business taxable income (UBTI) on leveraged real estate inside the IRA.

Mechanics: open an SDIRA with a custodian that accepts real estate (Equity Trust, IRA Financial, RocketDollar). The IRA buys the property; the IRA pays for repairs; the IRA receives the rent. You can't live in it, your family can't live in it, and you can't personally do the repairs.

UBTI trap: if you use leverage (a mortgage inside the IRA), the rental income attributable to the leveraged portion is taxed currently as Unrelated Business Taxable Income — at trust rates (37% above ~$15K of UBTI). For most leveraged rentals this eats much of the tax-deferral benefit.

Better structure for many: a Solo 401(k) for self-employed individuals avoids UBTI on leveraged real estate (a Solo 401(k) is exempt under §514). For most W-2 employees with no self-employment income, REITs in a regular IRA or Roth are simpler and tax-equivalent for most purposes.

#SDIRA#IRA#retirement#UBTI

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