Buy property cash with self directed solo 401k and refinancing.

[Johnny Horner]

Can a person use a self directed solo 401k to purchase a property cash and after you close get a loan and pay back the self directed solo 401k without any penalties?  The thinking here is cash and quick closing makes offer more attractive.  Thanks for any feedback.

[Brian Eastman]

@Johnny Horner

You cannot do what you propose.

With a self-directed Solo 401(k), there can be no transactions between the plan and yourself.  Either the plan buys the property as an investment or you purchase the property separately without any involvement from the plan.

The plan can purchase the property all cash.  The plan can then refinance with a non-recourse loan and pull some of the cash out of the property.  That cash would go to the Solo 401(K) and would need to be used by the Solo 401(k) for a separate plan investment.