Solo 401k In-Plan Roth Conversion - Real Estate

[Will Costello]

Hey All,

I have a home owned in a Solo401k (setup through Sense Financial), that I may plan to do an "In-Plan Roth Conversion" in the coming years. With this is mind, I want to make sure I understand the total wealth building strategy of this one time play. I am currently 37, with the expectation that I will convert this property in 2-3 years, pay taxes on it now, and will not access the capital until 67-70 years old (roughly 27-30 Years).

1) I understand that converting Real Property is totally acceptable, and I does not apply only to liquid/cash assets. I recognize that a third party appraisal will need to happen for the current value. True??

2) Once it is tax paid, all equity growth on the property, as well as dividends (rent) will also be tax free. True??

3) Any subsequent real asset purchases (home #2, home #3, Home #4) all come with the benefit of being purchased with those tax free dollars (from sale or dividends [rents]). And, each subsequent dividend (rent) all are viewed as tax free. True??

So, with 30 years approx to grow, I have the potential to do a one time taxable event, which may cost me up to $45k now. But, in the end, when each of these properties is debt free and cash flowing, none of the rents will be taxable. And if desired, the sale of all of the homes will also be tax free as well. True??

I want to make sure I understand the power of a single taxable event, which can likely cash flow a conservative $6,000 monthly in the end. Seems like an easy decision to make now to pay the $45k, in order to make $72k annually tax free in 30 years.

Thanks for any insight.
-Will