Self Directed IRA Non Recourse Loan in NY

Member since 2024 · 1 post · 1 vote

Hello. I have recently funded a self directed IRA. I have a few potential properties in New York State that I would like to purchase using my self directed IRA as a down payment. I will need to fund the other portion of the aquisistion with a Non Recourse Loan which I believe is the only loan that will legally work with usng my self directed IRA.

I am having trouble finding a lender that offers a Non Recourse loan for properties in New York State. Many lend in other states but no NY. Does anyone know of lenders that will offer a Non Recourse Loan in New Yorks State?

Is there another method to use my self directed IRA as a down payment combined with a loan?

Thank you for your help.

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

4mo

new york is just tough state to get financing, especially non recourse because it can take 3-5 years to foreclose and the accumulation of taxes and insurance on a property in NY can move it underwater very quickly on a default - that is one of the things going against you.

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Doug Smith
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
5mo
We don't lend in NY, but I might have an idea. I'll PM you.
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John Lopez
Member since 2026 · 12 posts · 2 votes
4mo
Hi Justin,
Great strategy. Only item I do want to point out here is to make sure who is that loan issued to. In the self-directed IRA space you Must be careful with not triggering a prohibited transaction. I have helped individuals with loans for IRAs but always had legal counsel oversee the loan because of this. Just something to keep in mind. Doug might be able to help you but if not I can look into it but it is very important you avoid any issue with that IRA.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
4mo
new york is just tough state to get financing, especially non recourse because it can take 3-5 years to foreclose and the accumulation of taxes and insurance on a property in NY can move it underwater very quickly on a default - that is one of the things going against you.
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Travis Erickson
Lender · Mesa, AZ · Member since 2026 · 8 posts · 4 votes
4mo
Justin, you're right that non-recourse loans are typically required for self-directed IRA real estate purchases.

NY can be challenging for this type of financing. I'd suggest checking with Solera Bank as a potential option, though I'm not certain they operate in NY specifically

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Ryan Coon
Attorney · Spanish Fork, UT · Member since 2025 · 77 posts · 97 votes
4mo
Great move on the self-directed IRA. One more critical item to keep on your radar is UDFI (Unrelated Debt-Financed Income).

Since you are using a loan to fund the acquisition, the IRA is technically holding a debt-financed asset. This triggers UBIT (Unrelated Business Income Tax), which can effectively turn your tax-free vehicle into a taxable entity for that specific deal. You could face taxes in the IRA up to 37% on the portion of income that corresponds to the percentage of debt financing on the property.

If you have a side business or are self-employed, you might look into a Solo 401k instead. Unlike the IRA, a Solo 401k is generally exempt from UDFI on leveraged real estate. It’s often a much better vehicle for syndications or debt-financed deals because it keeps the profits tax-sheltered without that extra UBIT hit.

Definitely worth a quick chat with a specialized tax pro before pulling the trigger!
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Scott Maurer
Member since 2026 · 5 posts · 3 votes
4mo
The IRS requires that the loan agreement not give recourse to your (or other disqualified persons for your account) personal assets (directly or indirectly) if there is a default. It is allowable for your IRA to borrow from (and/or partner with) any non-disqualified person or entity. It may be worthwhile to chat with non-disqualified persons in your real estate investing network to see if a deal can be had that is beneficial for both parties. And, as mentioned, the loan needs to be in the name of your IRA, not your personal name. Your SDIRA custodian will give you the proper titling and work with you on obtaining loan documents that satisfy the IRS' requirements.
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