A self-directed IRA (SDIRA) can hold alternative assets such as private real estate fund interests — not just publicly traded stocks — but the rules are stricter than a typical brokerage account. Understanding the guardrails up front prevents painful surprises at tax time.
Custodian vs. sponsor
Your custodian administers the IRA, processes subscription funds, and files required reporting; the sponsor runs the underlying asset. You still need to read offering documents because IRA eligibility does not replace business diligence.
Prohibited transactions and disqualified persons
IRS rules block certain deals between an IRA and you, your lineal family, or businesses you control. Even well-intentioned arrangements can blow up tax-deferred status if parties are related incorrectly. Always map facts before wiring capital.
Tax nuance
Some operating income inside an IRA can trigger unrelated business taxable income (UBTI) depending on entity structure and leverage — our mandate emphasizes debt-free investing partly to simplify that picture, but your CPA must confirm your facts.
Treat the SDIRA like a separate investor with its own counsel, not an extension of your personal checkbook.
Educational summary only — not tax, legal, or investment advice.