Leveraging real estate inside an IRA is entirely possible, but the IRS strictly prohibits you from personally guaranteeing the loan. The solution is a "non-recourse loan," where the property itself is the sole collateral.
Understanding the Core Mechanics
Because the lender cannot pursue your personal assets or the other assets in the IRA in the event of a default, non-recourse loans typically require a hefty down payment—usually between 35% and 50%.
Advanced Execution Strategies
While leverage increases your purchasing power, it introduces a tax nuance: Unrelated Debt-Financed Income (UDFI). The percentage of the income generated by the borrowed funds is subject to Unrelated Business Income Tax (UBIT).
Long-term Outlook
Despite the UBIT tax hit, many investors find that the cash-on-cash return generated by leveraging a Real Estate IRA still heavily outperforms buying a smaller property entirely with cash.