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.
