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UDFI (Unrelated Debt-Financed Income)

Tax Rules

A specific type of UBTI triggered when a retirement account earns income from property or investments purchased using debt financing (like a non-recourse mortgage). If your SDIRA buys real estate with a loan, a proportionate share of the rental income and capital gains becomes subject to UBIT. This is an important consideration for leveraged real estate investments in self-directed accounts.

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