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Utilizing Debt in IRAs for Real Estate Investments: Understanding UDFI and UBIT
This chapter delves into the concepts of Unrelated Debt Finance Income tax (UDFI) and Unrelated Business Income Tax (UBIT) when using a self-directed IRA to invest in real estate. It explores strategies to minimize taxes, exceptions to UBIT, leveraging debt for asset acquisition, and the benefits of Roth IRAs for tax-free distributions in retirement.