Acquiring cash flowing properties through IRA

[Shaun Inniss]

I'm a new investor who just opened an self directed IRA. Any suggestions on the first steps to acquiring properties via my IRA?

[Michael Wagner]

One thing to look out for is UBIT (Universal Business Income Tax)....Any Investment you make in your IRA that also has leverage attached to it will open you up to UBIT...this will be painful so should be avoided in most cases (unless the ROI is so good it justified incurring a tax inside a tax sheltered account).

This doesn't come into play if your IRA is lending money but only if you are buying ownership in a property. I prefer to use my IRA money for strictly lending purposes for this reason and I use my Solo401K (which can be structured to function as a REALLY BIG Roth account known as a Mega BackDoor Roth) with contribution limits of $56K per spouse per year to actually buy investments. The solo401K is not subject to UBIT even if leverage is used. Note this only applies if you have a business where you and your spouse are the only employees. Sorry for the tangent, just thought some might appreciate this complimentary strategy.