Can I live in property owned by me and my Solo 401k Trust?

QUESTION: 

If we want to purchase a home for ourselves but convert the basement to a walk-in separate rental unit, how do we construct the purchase of the home? Half owned by us personally and half by the 401k?

All by the 401k then sell back half to us at later date when renovation is done?

Could we live in top half of home while basement is being renovated, whether bought in our name or 401K name?

No way to buy it in 401k name then sell whole thing it to us in months or years right? Can one live in any property bought in 401k name while it is being renovated to flip or rent out?

ANSWER:

 It is prohibited for the solo 401(k) owner to use an asset such as real estate owned by his or her solo for personal use, even if the solo 401(k) owner invests his or her personal funds in the same property as his or her solo 401k.

In order for a solo 401(k) owner to ever use property owned by his or her solo 401(k) plan, the property has to be appraised and then distributed (in-kind asset distribution) out of the plan to the solo 401(k) owner, which means the solo 401(k) owner would pay taxes at income tax rates plus a 10% penalty if he or she is under age 59 1/2 at time of distribution.

To learn more about the solo 401k investment rules and regulations CLICK HERE.