Hello we have a question:
QUESTION: If we decided to purchase a rental property and fix it and the sell it, can we fix it with the Solo 401k money?
ANSWER: Good question. Because the rental property is an asset of the Solo 401k, any expense associated with the rental property including improvements are required to be paid with Solo 401k funds. If you were to use personal funds or outside funds, it would be considered a solo 401k prohibited transaction.
What’s more, since you are the Solo 401k trustee/participant, you cannot improve the rental property because you are considered a disqualified person for Solo 401k investment purposes; therefore, you will need to hire an outside party not considered a Solo 401k disqualified person to perform the real estate improvements/repairs.