Self-Directed IRA Real Estate Guide

Yes — a self-directed IRA (SDIRA) held by a specialized custodian can own investment property, with income and gains growing tax-deferred (or tax-free in a Roth). It appeals to investors with large retirement balances looking to diversify into real estate.

No self-dealing. You and certain family members can't use or personally benefit from the property, all expenses must be paid from the IRA, and all income must return to it. A prohibited transaction can disqualify the entire account — the penalty is severe.

You lose depreciation's personal benefit. Inside an IRA the tax advantages come from the account's structure, not from depreciation offsetting your income — so it's a fundamentally different play than the W-2-offset STR strategy.

It can — leveraged real estate in an IRA may trigger UBIT/UDFI (tax on debt-financed income). It doesn't rule out financing, but it adds a tax layer to model with a specialist before you use leverage.

Investors with substantial retirement-account capital who want tax-advantaged real estate exposure and don't need personal use or the depreciation offset. Match the tool to the goal — it's not a substitute for the personally-held tax-shield strategy.

It depends on whether your capital is in retirement accounts and whether you want the W-2 offset. Comparing the two for your goals is part of a Real Estate Review.