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Updated over 9 years ago on .
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Real Estate IRA vs. Solo 401k
So my wife and I are starting to look for a house to buy with our IRA, and then rent out, probably in Florida. This is something we have been considering for a couple years, and understand the procedure and rules.
But as of last night I started learning about doing the same thing from a Solo 401k, which we would fund from our IRA, which apparently we are eligible for since I have been self-employed with my own business for the last 20 years. So we also understand the ins and outs of running a business, along with the related responsibilities and tax laws. My wife is a diligent bookkeeper, and we have a sharp CPA doing our taxes and giving general advice.
I am learning about all the advantages of using a Solo 401k instead of an IRA, but what are the disadvantages? It appears that I don't need a custodian for this, but what professional services do I need, besides a CPA? Any other pitfalls to watch out for?
Is the money easily moved from the IRA to the Solo 401k?
We would be leveraging this with a non-recourse loan. Would this be done the same way as with an IRA? Do the lenders care one way or the other?
Thanks for any help.
David
Most Popular Reply

- Solo 401k Expert
- Anaheim Hills, CA
- 6,245
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UDFI (Unrelated Debt Financed Income) is the income produced from the financed portion of the property inside of a retirement account and it triggers UBIT (Unrelated Business Income Tax) when transaction happens inside of an IRA. Solo 401k is exempt from this rule.
Hope this helps.
- Dmitriy Fomichenko
- (949) 228-9393
