.** However, when one uses leverage or engages in a trade or business with an IRA, then UDFI and UBIT taxation may apply.  

There are 20+ CPAs and accountants on this site that specialize in real estate taxation.

If you use the money to properly buy real estate, then the returns you get on that money will greatly outweigh any "double taxation" you pay on the interest.

There are 20+ CPAs and accountants on this site that specialize in real estate taxation.

@Edward Synicky Your information is incorrect.A Solo 401(k) is not subject to the UDFI taxation that applies in an IRA to returns generated from leverage such as  a mortgage.If an IRA or a Solo 401(k) engages in a trade or business on a regular repeated basis (such as flipping more than one house), then the gains from that business activity are taxed as UBTI (Unrelated Business Taxable Income).  

Furthermore, depending on the nature of your business and your personal marginal income tax rate, holding real estate in a corporation could very well result in higher taxation than holding real estate in your own name.  

@Matt AndrewsCapital gains taxation is federal, so any strategies for mitigation of taxes due are more broadly applicable than Ontario ... though individual provinces have their own pile-on taxation on the portion of gain included in your income.Though immaterial to the taxation, I presume the mortgage is being held in an SDRSP to which an arms-length third-party is the beneficiary?

. - Capital gains (Depreciation will be taxed at 25% while the rest will be taxed at 15%)- Net Investment Income Tax (this is a federal tax) at 3.8%- CA income tax (the proceeds are taxed as ordinary income with a max rate of 10.3%)You'll also have CA withholdings required, so you'll need to account for that at tax time. 

He then wanted to talk about his odds of being audited and what numbers he needed to report to fly under the radar.I interrupted him part way through a rant against taxation, government, etc and said "I don't think I'm the right CPA for you."  

Sue,Correct, prop 13 helps and keeps my current property tax at low rate (whatever price I bought level).