Rental income inside an IRA is generally tax-deferred — but the moment your IRA borrows to buy a property, a portion of that income may become immediately taxable through UBIT. For 2026, the 37% bracket hits at just $16,000 of trust income. Here's how the calculation works, why non-recourse loans are the only permitted financing, and when the all-cash approach simply makes more sense.
One prohibited transaction under IRC Section 4975 and the IRS treats your entire account as distributed on January 1 of that year — the full balance becomes ordinary income, all at once. Here's exactly how these rules work, who counts as a disqualified person, and the four violations that catch investors most often.
Your self-directed IRA can act as a private lender — issuing mortgage notes, earning interest tax-deferred, and bypassing Wall Street entirely. Here's how the structure works, what loan types are permitted, why private lending generally avoids UBIT, and what due diligence falls on you before you fund a single note.
