Depreciation is wasted in here, so which assets actually belong inside the wrapper

Everything the account gives you on the income side, it takes back on the deduction side, and I don't see this discussed much when people compare an IRA rental to the same rental held personally.

Inside the IRA there is no depreciation deduction that does anything for me, because there's no taxable income at the account level to shelter. No cost segregation study worth paying for. No passive losses carried forward to offset a future sale. No 1031, since the account doesn't need one to defer anything. And at the end, no step-up in basis for heirs on the property itself. The Roth version answers most of that by making the exit tax free, so the lost deductions cost nothing. The traditional version converts what would have been long-term capital gain, taxed at capital gains rates outside, into ordinary income on distribution.

Run that through and the asset selection changes. A high-yield property with a small depreciation base relative to its rent, an older building in a cheap market with strong cash flow, gives up almost nothing by sitting inside the wrapper, and the tax-free rent compounds. A newer, heavier-basis property whose early-year returns come largely from depreciation and appreciation seems to belong outside, where the deductions and the eventual capital gains treatment and the step-up all work. Land is the strange case, no depreciation to lose at all, no income either, so the wrapper's only real gift is shielding the eventual gain.

Notes are the other candidate. Interest would be ordinary income outside the account and is exempt from UBIT inside, so the wrapper's benefit is largest exactly there.

I'd like to know how the room ranks these, because the depreciation argument seems to point away from property and the compounding argument points straight at it. Anything that turns on how your own return would change belongs in front of a tax professional.