SD IRA and UBIT/UDIF taxes

[Jim Peret]

I'm looking to start a SD IRA checkbook LLC. I've got retirement accounts to fund it and start investing immediately.

I was talking to a CPA about investing in their Private Equity fund.. When I told him I wanted to us SD IRA money he said it wasn't a good investment for me. He said I have to pay UDFI tax on the leveraged amount. That would reduce the return too much. I heard about UBIT/UDIF taxes but didn't think they were that significant. I think most real estate investments should have some leverage. They talk about SD IRA investments for real estate a lot but is that for younger investors who haven't built their accounts up yet?

Any SD IRA investors dealing with this? Or anyone else got some feedback? I'd hate to put in index and bond funds. I sleep better with real estate as rents rarely go down.