Self-Directed IRA Real Estate Calculator
Hold rental real estate inside a self-directed IRA for tax-deferred growth — but UBIT taxes the leveraged portion of returns at trust tax rates (up to 37%) and custodian fees can erode 0.5-2% annually.
| Down payment (IRA capital deployed) | — |
| Loan amount (non-recourse) | — |
| Debt-financed % (UBIT applies to this share) | — |
| Cumulative net rental over hold period | — |
| Property value at end of hold | — |
| UBIT tax on leveraged returns | — |
| Cumulative custodian fees | — |
| Net IRA value at end of hold (after UBIT + fees) | — |
A self-directed IRA (SDIRA) lets you hold real estate inside a tax-advantaged retirement account. The gains grow tax-deferred (Traditional SDIRA) or tax-free (Roth SDIRA). However, three frictions reduce net returns: (1) UBIT tax on leveraged returns, (2) custodian fees of $500-$3,000/year, (3) the prohibited transaction rules that strictly forbid personal use. This calculator quantifies all three.
UBIT — The Hidden Tax on Leveraged Real Estate
When an IRA borrows money to invest, the portion of income and gains attributable to the debt is 'unrelated debt-financed income' (UDFI) and is subject to unrelated business income tax (UBIT). UBIT uses trust tax brackets — only $14,450 of UBIT before hitting 37% marginal rate. A $300K rental with 60% LTV loan = 60% of net rental income and 60% of capital gain subject to UBIT at up to 37%. This often wipes out the tax advantage of holding real estate in an IRA. Solo 401(k)s are exempt from UBIT on debt-financed real estate (powerful workaround if you're self-employed).
Prohibited Transactions — Severe Penalty
The IRA cannot transact with you or 'disqualified persons' (spouse, ancestors, lineal descendants, their spouses, and entities they own 50%+). You cannot live in the property, even briefly. You cannot store personal property there. You cannot perform repairs personally — must hire independent contractors paid from IRA funds. Violations cause the entire IRA to be deemed distributed in the year of violation — 100% taxable plus 10% early withdrawal penalty (if under 59.5). Many SDIRA holders have lost entire retirement accounts to inadvertent prohibited transactions.
Custodian Fees and Operational Friction
SDIRA custodians charge: setup ($50-200), annual maintenance ($300-800), per-asset holding ($150-600 per property), transaction fees ($50-100 per rent check, expense, distribution), and wire fees. Active rentals can rack up $2-3K/year in fees. The custodian processes ALL money flows — rent goes to custodian, custodian distributes to vendors, all on a manual basis with paperwork. Compare to a non-IRA rental where you handle Venmo rent and Home Depot in 5 minutes. Many investors abandon SDIRAs after a few years due to operational friction.
Last updated May 2026. Sources: IRS Prohibited Transactions.