Self-directed IRA for private investments
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A regular IRA holds stocks and funds. A self-directed IRA can hold private investments too: real estate, private funds, notes and more. Their returns then grow tax-deferred, or tax-free in a Roth.
For owners who already invest privately, it can move high-growth deals into a tax-sheltered account. The rules about what you can't do with the IRA's assets are strict, and breaking them can disqualify the whole account.
How it works
A self-directed IRA can own private funds, real estate and notes, so their returns grow tax-deferred, or tax-free in a Roth. Many alternative-investment funds accept IRA money.
What makes it hold up
- A custodian that allows alternative assets
- Every investment titled in the IRA’s name and paid from the IRA
- Year-end values reported by the custodian
Risks
Moderate. You can’t use or benefit personally from what the IRA owns. Funds that borrow can create unrelated business income tax (UBTI) inside the IRA.
Questions to ask your CPA
- Which of my deals would be better held in a Roth IRA?
- Do any of my funds create UBTI?
Common questions
What can a self-directed IRA own?
Real estate, private equity and real estate funds, private loans and notes, and many other alternatives. It can't own life insurance or collectibles.
What is a prohibited transaction?
Using or benefiting personally from what the IRA owns, or dealing with yourself or close family. Living in an IRA-owned property or lending IRA money to yourself are examples, and they can disqualify the IRA.
What is UBTI?
Unrelated business taxable income. When an IRA owns a fund or property that uses borrowed money, part of the income can be taxed inside the IRA. A solo 401(k) avoids this for real estate bought with a loan.
Which deals belong in a Roth?
The ones you expect to grow the most, since a Roth's growth comes out tax-free.
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Education, not advice. Tax law changes and every situation is different, so confirm the details with your CPA or tax advisor before acting. This page was last checked against tax law as of October 2026, including the 2025 tax law, in October 2026.