Can my Solo 401k sell a house to another LLC I own?

[John McAuley]

Hi Guys,

Would it be possible for me to purchase a home with my Solo 401k, fix it up, then flip it to an LLC I use for my buy and hold rentals? Basically I would use the funds in the 401k to purchase my deals, fix them up with funds in the 401k as well, then sell them for a profit to my LLC which would then rent them out long term. Not sure if this is legal but was something I was thinking about tonight, trying to figure out the best way to use those funds to advance my holdings. Thanks.

John

[Dmitriy Fomichenko]

The LLC that you own is a disqualified party, so it would be a prohibited transaction between the Solo 401k and that LLC.

On another note, house flipping with a Solo 401k can be considered an active business, and the Unrelated Business Income Tax (UBIT) will apply. This depends on many factors, including the frequency of flipping transactions done by your Solo 401k. However, I would recommend talking to a qualified professional to avoid expensive charges down the road.