Self Directed IRA - Paying UBIT
I have a Self Directed IRA, Entrust, and am considering instructing them to purchase two different income properties,puting down payments on them and financing both with a Lender that will do Non recourse loans. I am trying to determine if it is worth financing 1 of them or both, as there will be the (UBIT) or Unrelated business Income taxes due on the financed portion. How do I figure this tax? Is UBIT considerable? I have enough in my Self Directed IRA to purchase one of them with no mortgage necessary, should I direct Entrust to purchase the other, with entrust taking the down payment out of the one being held without a mortgage, and then get the Lender to finance on the 2nd property only? Will there will be no UBIT tax due on the first, because there is no mortgage on it? And only Ubit on the other one? Have I lost you, or am I clear on this? Any insight would be appreciated. Please help. Thanks.
There would be no UBIT tax on the first property, if there is no mortgage on it. I believe if the 2nd property is not making more than $1000 profit, then UBIT is not applicable. Refer to www.IRS.GOV. What lenders do non-recourse loans?