Airbnbn Solo 401k Rental Income – UBIT Considerations

Question:

If I rent real estate owned by my Solo 401k via Airbnb, will the rental income be subject to unrelated business income tax (UBIT)?

Answer:

While the UBIT rules are complex and depend on the facts and circumstances, short term rental income earned from real estate owned by a Solo 401k will generally be subject to UBIT if such income constitutes business income.
While income earned from leasing real estate is typically considered non-business rental income, the IRS has identified certain scenarios where real estate rental income is treated as business income.
  • The average period of customer use is 7 days or less.
  • The average period of customer use is 30 days or less and significant personal services are provided with the rental.
See Treas. Reg. § 1.469- 1T(e)(3)(ii)
As such, if Solo 401k real estate is rented via Airbnb on a short-term basis as described in one of the above scenarios, the income would generally be subject to UBIT.

Question:

Can I “manage” the Airbnb personally as the trustee of the solo 401k plan or will I have to get a property manager obviously paying those fees through the solo 401k trust ?

Answer:

Given the volume of activity associated with an AIRBNB, the management would need to be provided by a management company and paid for with funds from the solo 401k trust.

Question:

I am looking to roll my 401k funds into a ROBS 401k account in the coming months and i am curious if the ROBS C corp can buy my home as an airbnb rental at fair market value

Answer:

The ROBS entity that is funded with your retirement funds cannot purchase real estate that is owned by you or a related person (or an entity owned by you or a related person).

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About George Blower

I have the privilege of educating our clients about our products and services so that they can make informed and confident decisions about their financial future. Prior to joining My Solo 401k Financial, I served as the general counsel for a subsidiary of a Fortune 500 financial services company. Learn more about George Blower and My Solo 401k Financial >>

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