Using a Solo 401(k) Plan To Buy Real Estate

Investment Strategies
Why use your Individual 401(k) (also known as Solo 401(k)) to buy real estate? There are many opportunities you’ll receive when establishing an Individual 401(k). It’s just like a traditional 401(k), but is especially designed for someone who is self-employed or has a business with no full-time employees other than themselves, a spouse or other business partner.

There are only two eligibility requirements for establishing an Individual 401(k). First, you need to have some self-employment income. In other words, you can’t be retired or generate passive investment income. The second is that you cannot have any full-time employees except for yourself, a business partner or a spouse.

Why make a real estate investment with an individual 401(k)?

1. Tax-deferral: You don’t pay tax; you always defer taxes. This is attractive for real estate because of gains and income.

2. Use leverage to buy real-estate: If you use an IRA to buy real estate, you pay UBTI tax. With an individual 401(k), you can use a nonrecourse loan, combine it with your IRA and purchase your real estate. When you use an individual 401(k), you don’t have to pay UBTI taxes.

Learn more about the benefits of an Individual 401(k) retirement plan for self-employed or small business owners. Please visit:

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