If you have a self-directed IRA that invests in rental properties, then you might have to pay Unrelated Business Income Tax. The tax is due to be paid by the IRA if your rental is “debt-financed” and has more than 1K of taxable profit in a year. Most rentals don’t show a taxable profit because of depreciation expense in normal years. The rental, will, however, likely have a taxable profit in the year of sale. To avoid paying this tax in the year of sale, you would have to make sure the rental was not debt-financed at least 12 months before the date of sale. You would need to put more money in the self-directed IRA that owns the rental, pay off the mortgage, continue to hold the rental for 12 months, and then sell it. Since the tax is up to 37% of your profit in the year of sale, this strategy might be worth the hassle.
Accounting and Consulting