Selling a house in under a year while inside the Solo 401K Trust

QUESTION:

I am buying a house inside of my setup solo 401K.  Are there any negative tax consequences with selling the house in under a year’s time-frame?  I do this business full time and this would be the only property that I have bought to date with the 401K.

ANSWER:

Good question. Generally when real estate flipping is performed inside a solo 401k plan, it will deemed a business and thus subject the retirement account to unrelated business income tax (UBIT). The reason for this tax is to even the playing field for those that don’t use retirement funds to flip real estate.

A rule of thumb is not to flip real estate consistently inside a solo 401k plan.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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