Using my Solo 401k to build an ADU on my personal investment CPA

[Jay Dimacali]

Hello BP,

My question has to do with investing in building my ADU on one of my rental properties. I'm about to build an ADU at my rental and I would like my solo 401k to cover the costs. Would this be a legal transaction? I want to make sure I'm not self-dealing.

My rental is a personal investment but if I'm building a new project (the ADU) on it's own and wouldn't that count as a separate investment that my solo 401k can invest in? The ADU gets its own address from the city. Or is the project being associated with the rental enough to shoot it down?

Input from any CPAs and Solo 401k specialists out there is appreciated.