Self-Directed IRA and Vacation Rentals

[Victor A.]

I've been researching SD IRAs and came upon a discussion in another forum regarding the tax treatment of Vacation Rentals. The thread had nothing to do SD IRAs, but mentioned that the IRS treats vacation rentals (rentals with terms of 7 days or less) as a business activity, not passive income.

To me that sounds like vacation rentals held by a Self-Directed IRA would be subject to the Unrelated Business Income Tax (UBIT). But that's just my opinion and I'd like to hear what others in this forum think. I read "The Self Directed IRA Handbook" by Mat Sorensen, which is an excellent reference, but it made no mention of vacation properties.