Roth IRA vs. Cash: Tax Benefits & Depreciation on Multifamily Investments

[Yi Chu]

If I invest a multifamily through a Roth IRA, will I still receive the same tax benefits as I would with personal cash when I file my tax return? Will I lose depreciation deductions if I use Roth IRA fund?

[Dmitriy Fomichenko]

@Yi Chu,

Another important factor you need to understand is that when an IRA is invested in leveraged real estate (most MF deals are), the portion of the income derived from the leveraged portion of the property will be subject to Unrelated Business Income Tax (or UBIT), which can be offset by using depreciation and other deductions. Be sure to consult with an experienced tax expert so you understand the tax consequences.