Real Estate & Investing
SDIRA Real Estate Calculator
Estimate net income and return on a property purchased with self-directed IRA cash, plus how the balance could compound over ten years.
Calculation inputs
Enter the IRA cash available and the property's income and costs.
Results
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Complete the fields and select Calculate to show results here.
UBIT/UDFI may apply if leveraged. Consult a CPA and SDIRA custodian.
About this calculator
This calculator estimates the annual net income, cash-on-cash return, and ten-year growth potential of a property purchased with cash from a self-directed IRA. It is meant for people exploring how real estate held inside a retirement account might perform, not for the tax and compliance rules that govern the account itself.
How the calculation works
- SDIRA cash invested = purchase price, limited by the IRA balance available
- Annual net income = rental income − annual expenses
- Cash-on-cash return = annual net income ÷ SDIRA cash invested × 100
- Projected 10-year balance = invested amount × (1 + return rate)^10
Notes and assumptions
All income and expenses must flow through the IRA; personal use or self-dealing can disqualify the account.
Leverage inside an IRA introduces unrelated debt-financed income rules.
How it works in plain English
You enter the SDIRA balance available, the property's purchase price, and its expected annual rental income and expenses. The calculator invests up to the property's full price, limited by whatever balance you actually have available, since a self-directed IRA generally cannot use money you don't already hold in the account.
Subtracting annual expenses from annual income gives net income, which is then divided by the cash invested to produce a cash-on-cash return percentage. This is the same basic idea as cash-on-cash return outside a retirement account, just applied to IRA dollars instead of personal savings.
To illustrate long-run growth, the calculator projects the invested amount forward ten years at the same rate of return, compounding annually and assuming every dollar of net income is reinvested rather than withdrawn. This is a simplified projection, not a forecast, since real rental income, expenses, and property values all change year to year.
The formula
- Cash invested = min(purchase price, SDIRA balance)
- Annual net income = rental income - annual expenses
- Cash-on-cash return = annual net income / cash invested x 100
- Projected 10-year balance = cash invested x (1 + return rate)^10
Worked example
An investor has $250,000 available in a self-directed IRA and buys a $180,000 rental property outright with IRA cash. The property brings in $21,600 a year in rent and costs $7,200 a year to run, leaving $14,400 in annual net income. The remaining $70,000 of the IRA balance stays uninvested in this scenario, sitting in cash or other assets rather than going toward the property.
Dividing the $14,400 net income by the $180,000 invested gives a cash-on-cash return of 8%. Compounding $180,000 at 8% a year for ten years, assuming all income stays inside the IRA and is reinvested rather than distributed, projects a balance of roughly $388,600, an increase of about $208,600 over the original investment. That growth happens entirely inside the tax-advantaged account, so none of it is taxed each year the way it might be in a personal account, though standard IRA distribution rules still apply whenever the money is eventually withdrawn.
Frequently asked questions
Can I use a mortgage to buy property in a self-directed IRA?
Some SDIRA custodians allow non-recourse loans, but leveraged property inside an IRA can trigger unrelated debt-financed income (UDFI) tax, which this calculator does not model. If you plan to use financing, review the rules with your custodian and a tax professional before assuming the numbers here apply directly.
What happens if my SDIRA balance is less than the purchase price?
The calculator caps cash invested at whatever balance you enter, so it will not model buying a property with money you don't have. In real life you would need additional IRA funds, a partner IRA, or financing through the account to close the gap.
Why can't I take rental income out and spend it personally?
All income and expenses from an IRA-owned property must flow through the IRA itself; taking rent for personal use or paying expenses from personal funds can be treated as a prohibited transaction and disqualify the account's tax-advantaged status. This calculator assumes income stays inside the IRA.
Is the ten-year projection realistic?
It's a simplified compounding exercise, not a prediction. It assumes the same net income rate every year with no vacancy spikes, major repairs, or rent changes, which real properties rarely maintain exactly. Use it to compare scenarios, not as a guaranteed outcome.
Do I still pay property management or repair costs from the IRA?
Yes. Every expense connected to an IRA-owned property, including management fees, repairs, taxes, and insurance, must be paid from IRA funds, not personal accounts. Paying any of these costs out of pocket, even temporarily, can create the same prohibited-transaction problem as pulling rental income out for personal use. This keeps the investment properly isolated inside the retirement account and preserves its tax-advantaged treatment.
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