UDFI/UBIT are terms that are used a lot when discussing self-directed IRA plans. Short for unrelated debt-financed income and unrelated business income tax, respectively, they refer to two forms of tax that can impact your plan each year. Because of this, it’s vital that you have an in-depth understanding of what these aspects of financial management could mean for you. At uDirect IRA Services, we want our clients to know all they can about these crucial variables. This way, you’re not just a smart saver but also a savvy manager of your overall finances long-term. Learn more about UBIT/UDFI here. We discuss these terms in greater detail and provide additional resources for you to use to inform your next steps. You can also contact us with any of your questions. Our team of professionals will ensure you know everything you need.

  • UDFI

    • Unrelated Debt Financed Income TaxAny property held to produce income is debt-financed property if at any time during the tax year there was acquisition indebtedness outstanding for the property.


    • Unrelated Business Income Tax
    • If a tax exempt entity engages in a business that is unrelated to its primary purpose, any income derived from such business will be subject to UBIT
    • IRS Pub 598
    • UDFI & UBIT are reported on form 990-T
    • Instructions for the 990-T