Typically, self-directed IRAs can trigger the Unrelated Business Tax (UBIT) if they make investments that use debt to magnify returns.

However, Real Estate Investment Trusts (REITs) are exempt from UBIT, even though there is debt on the asset. Each Arrived property is structured and taxed as a REIT, so income from each home is exempt from UBIT.

This exemption also applies to the Unrelated Debt Financing Tax (UDFI).

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