Real estate income in traditional IRAs is not taxable until the assets are withdrawn. Assets withdrawn from Roth IRAs are tax-free. Real estate investments are not usually correlated with fixed income or equity investments, and can provide protection against inflation. Unlike privately owned properties, you are not eligible for tax deductions in your real estate IRA.
Deductions are not allowed for property taxes, qualifying expenses, or depreciation on your taxes. Nor can mortgage interest be deducted; however, since most investors buy their properties directly from the IRA (without the use of a mortgage loan), this is often debatable. The growth of those investments can be maintained in the IRA until retirement age, when you can withdraw tax-free or at the current tax rate, depending on the type of IRA you have. Most investments in an IRA have no current tax consequences, not because all the income an IRA earns grows tax-free, but because the types of income that an IRA normally earns are exempt from UBTI regulations.
In addition, since an IRA is generally not required to file a tax return and IRA account holders and their advisors are normally not familiar with these topics, no one is likely to notice that a tax has been collected, including the IRS. For this reason, most investors in an IRA don't know that an IRA can be required to file a tax return (Form 990-T, business income tax return from an exempt organization) and pay taxes.