Self directed IRA real estate investing is one of the most practical ways accredited investors try to invest in real estate using retirement dollars, while keeping the tax benefits that come with an IRA.
The key is that "real estate in an IRA" does not have to mean buying a rental. Many real estate investors prefer an IRA for private lending, where the IRA invests in loans or promissory notes backed by real property, often through a fund. It can be simpler operationally, and it can reduce the chance of accidental rule violations.
This page walks through how IRAs SDIRA setups work, what an IRA custodian does, what the IRS cares most about, and the due diligence that actually matters.
What Is Self Directed IRA Real Estate Investing?
Self directed IRA real estate investing means using an IRA that can hold alternative investments, not just public stocks, bonds, or mutual funds. Your SDIRA (often written as IRAs SDIRA) is still an IRA account, but it is administered by a custodian who allows a wider range of assets.
You can use a self-directed structure with a traditional IRA (typically tax deferred) or with Roth IRAs (typically tax advantaged in a different way). The account type affects taxation later, but the compliance rules around transactions are the big thing to get right either way.
What Does "IRA for Private Lending" Mean?
An IRA for private lending usually means your IRA invests in debt tied to real estate, rather than owning the property itself. That can look like:
- Your IRA investing in individual promissory notes secured by real estate
- Your IRA investing in a private fund (an "IRA funds" style allocation) that holds a diversified pool of collateral-backed loans
For many investors, private lending is a cleaner way to invest in real estate inside an IRA because you are not dealing with tenants, repairs, or property-level decisions that can create compliance risk.
The IRA Custodian's Role (And What They Do Not Do)
Your IRA custodian is the administrator that holds the IRA and processes transactions based on your direction. The custodian keeps the account in the right wrapper and handles reporting and paperwork.
What most investors should assume: the custodian is not validating the investment quality for you. That makes due diligence your job, or your advisor's job if you work with one.
The IRS Rules That Matter Most: Prohibited Transactions
The IRS is especially focused on prohibited transactions, which are generally "improper use" of an IRA by the account owner or other disqualified persons. Common examples include borrowing from the IRA, selling property to it, or using the IRA in a way that creates personal benefit today.
There are also consequences when someone participates in a prohibited transaction. The IRS describes excise taxes that can apply to disqualified persons involved.
Practical takeaway for real estate investors: a lot of mistakes happen when someone tries to personally manage or "help" an IRA-owned asset. Private lending through a fund can reduce those touchpoints.
$17.5M
Capital Deployed
Across active real estate debt investments in 2025
95
Deals Funded
Individual transactions underwritten and successfully closed
0%
Default Rate
Zero investor principal losses across our entire lending history
Do You Have to Pay Taxes Inside an IRA?
Most investors assume "no," but the honest answer is: sometimes you might have to pay taxes, depending on the type of income and structure.
Two terms come up often in real estate contexts:
- Unrelated business income concepts (UBI/UBTI)
- Debt-financed income concepts (often discussed under "debt-financed property" rules)
These topics are technical, and the right action is to review the expected tax reporting with the sponsor and your tax professional. If an IRA invests in something that triggers these rules, it may have a filing requirement and tax due at the IRA level.
“We don’t chase yield by taking on more risk. We protect capital first — returns follow from discipline, not speculation.”
SPG Capital Investment Philosophy
A Simple Diligence Checklist for SDIRA Real Estate and Private Lending
Because custodians generally do not vet deals for you, you want a repeatable diligence process.
Structure and Documents
Is it a promissory note, a fund, or direct property ownership? How do cash flows return to the IRA account?
Compliance Fit
Could your involvement create a prohibited transaction? Are there any disqualified-person issues?
Manager Quality
For a fund, who is underwriting, servicing, and managing loan performance?
How You Get Paid
If it's private lending, what is the return source (interest payments, fees, other)? How are distributions handled?
Liquidity and Timeline
Most alternative investments are not designed for daily liquidity. Confirm commitment terms and redemption policies.
This is not investment advice. It is a framework for better investment decisions.
Accredited Investors
Ready for steady returns on your investment?
See how SPG Capital's current fund is structured and whether it aligns with your investment goals.
The SPG Approach
How SPG Capital Fits Into Self Directed IRA Real Estate Investing
SPG Capital is a private real estate debt fund for accredited investors. The fund deploys investor capital into a diversified portfolio of short-term, first-position, collateral-backed real estate loans in PA, DE, and NJ.
Why this can align with SDIRA investors:
Real Estate Exposure, No Rental Property
It supports real estate exposure without owning a rental property in the IRA.
Simpler Operational Footprint
It can simplify operations compared to direct property ownership.
Built for Retirement Accounts
25%+
Of current investors use retirement accounts
SPG Capital accepts Self-Directed IRAs and SEP IRAs.
9% or 10% Preferred Return, Paid Monthly
The preferred return structure is 9% (1-year) or 10% (2-year), paid monthly, with distributions paid on the 15th.
QUESTIONS? We Have Answers.
Frequently Asked Questions
Often, yes, if you use an IRA custodian that supports alternative assets. The rules around prohibited transactions still apply regardless of IRA type.
They are transactions the IRS prohibits because they involve improper use of the IRA or personal benefit, often involving disqualified persons. Examples include borrowing from the IRA or selling property to it.
Many self-directed IRAs can, depending on the custodian and the specific investment. Make sure the note structure, collateral, and servicing are clear, and do your due diligence.
Not for having an SDIRA, but many private offerings are limited to accredited investors. Under Rule 506(c), issuers must take reasonable steps to verify accredited status.
Custodians typically do not provide investment advice on deal quality. Investors should rely on their own due diligence and qualified professionals.
Ready to dig in?
A Natural Next Step
If you are exploring self directed IRA real estate investing as part of a more resilient investment portfolio, start with the hub page: Investments for Accredited Investors.
If you specifically want to understand how an IRA for private lending can work inside SPG Capital's preferred return structure, the next step is to review the Investment Opportunities page and decide whether a short conversation makes sense.
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