Self Directed 401K Investiment Property

[Rafael Moreira]

HI,

I created an LLC a few months ago for my consulting business, and would like to get a Self Directed 401K account setup soon for future real estate investiment. I live in the Pocatello, Idaho area and would like to know if anyone has any recommendations of Banks or Credit Unions I should use for that.

Another question that I have is: When you buy an investment property with your Self Directed 401K, can you depreciate that property on your personal income tax return?

I appreciate any suggestions.

Thanks!

[Brian Eastman]

@Rafael Moreira

A bank or credit union will not establish your Solo 401(k) plan.  You will want to work with a specialty provider of such plans or a CPA/Attorney who offers such services.  A self-directed Solo 401(k) will allow you to open an operating account at the bank or brokerage of your choosing. While a credit union could hold such an account, most don't get beyond bread and butter personal or business accounts.

When a plan invests in property all expenses and income are under the umbrella of the plan.  Since the plan is not taxed on the income received, deductions such as depreciation simply do not apply.  No taxes, nothing to deduct against.  You cannot personally write of expenses that are incurred within the plan.