Self-Directed IRA Real Estate UBIT Calculator
Calculate UBIT (unrelated business income tax) on debt-financed real estate in self-directed IRA. UBTI triggers at compressed trust brackets.
| Net rental income (after depreciation) | — |
| Debt-financed share | — |
| UBTI | — |
| UBIT tax (trust brackets) | — |
| Net to IRA after UBIT | — |
Self-directed IRAs that invest in debt-financed real estate trigger UBIT (Unrelated Business Income Tax) on the debt-financed portion of income. Trust tax brackets compress to top 37% at just $15,200 — making UBIT a major drag on leveraged SDIRA real estate.
Why UBIT Applies
IRAs are tax-exempt for passive investment income (rents, dividends, interest). When property is purchased with debt (mortgage), the debt-financed share of income is 'unrelated business income' (UBTI) under IRC §511-514. Taxed at trust rates inside the IRA.
Compressed Trust Brackets
2026 trust brackets: 10% to $3,150 / 24% to $11,450 / 35% to $15,200 / 37% above. Hits top rate 41× faster than individual. SDIRA gets a $1,000 specific exemption before UBIT applies.
Solo 401(k) Exception
IRC §514(c)(9) exempts qualified plans (including solo 401(k)) from UBIT on debt-financed real estate IF the seller is unrelated, debt is not personally guaranteed, and other conditions met. Strongly preferred over SDIRA for leveraged real estate.
UBIT on Sale
Sale of debt-financed property within 12 months of debt repayment also triggers UBIT on capital gain. Plan exits carefully — clear debt 12+ months before sale to avoid this trap.
Last updated May 2026. Sources: IRC §511 UBIT, IRS SDIRA Pub 590-A.