SDIRA UBIT/UDFI on cash-out refi

[Karin Cornils]

If this question has been answered in a previous post, please feel free to redirect me to that post.

The property currently held by my SDIRA is free and clear of debt. If I were to buy a second property in this SDIRA , I am guessing that I have the option of refinancing it via a direct nonrecourse loan on the new property as well as using a cash-out refinance on the first property to help finance the second property, or possibly a combination of the two?

I wanted to get some clarity on how the UBIT/UDFI would be calculated if I used one property to fund the other. For instance, if I used a cash-out refi on the first to fund the second, am I correct in thinking that the income on the first property would not be taxed, but the net income on the second would be taxed on the percentage of the property funded by the first? Would there be an advantage to one loan approach over the other? Thanks.