How the Self-Employed Can Flip Homes Tax-Free

Since the creation of the Solo 401(K) Plan back in the early 1980s, the IRS has always permitted a Solo 401(K) Plan to purchase, hold, or flip real estate. By using a Solo 401(K) Plan, also known as a self-directed 401(K) Plan or Individual 401(K) Plan, to buy real estate, you will be able to purchase raw land, domestic or foreign real estate, residential or commercial property, flip homes, and much more tax-free and without requiring custodian consent!

Flipping a Home is as Simple as Writing a Check

With a Solo 401(K) Plan, flipping homes or engaging in a real estate transaction is as simple as writing a check. As trustee of your Solo 401(K) Plan, you will have the authority to make real estate investment decisions on behalf of your 401(K) Plan on your own without needing the consent of a custodian. One of the true advantages of a Solo 401(K) Plan is that when you want to purchase a home with your Solo 401(K) Plan, you can make the purchase, pay for the improvements, and even sell or flip the property on your own without involving the custodian or any third-party. In other words, with a Solo 401(K) Plan, you will have the power to flip homes or do multiple real estate transactions on your own without requiring the consent of a custodian. One additional important advantage of purchasing real estate with a Solo 401(K) Plan is that all income and gains are tax-deferred until a distribution is taken (distributions are not required until the 401(K) Plan participant turns 70 1/2). In the case of a Roth Solo 401(K) Plan, all gains are tax-free.

Flip a Home without Requiring the Consent of a Custodian

A Solo 401(K) Plan is the most efficient and cost effective vehicle for doing house flips with retirement funds. With a Solo 401(K) Plan, you will be able to use your 401(K) funds to purchase real estate and engage in flipping homes tax-free and without custodian consent. A traditional 401(K) Plan custodian (financial institution) will not allow you to purchase real estate using your retirement funds. Therefore, in order to have the ability to engage in house flipping transactions using retirement funds, a Solo 401(K) Plan is the answer.

Control the Entire House Flipping Transaction

Unlike a conventional 401(K) Plan which requires custodian consent and requires high custodian fees, a Solo 401(K) Plan will allow you to buy real estate by simply writing a check. With a traditional custodian controlled Solo 401(K) Plan, you will have total control to make a real estate purchase, pay for improvements, and then sell the property without ever talking to the custodian. Since all your 401(K) funds will be held at a local bank in the name of the Solo 401(K) Plan, all you would need to do to engage in a house flipping transaction is write a check straight from the Solo 401(K) Plan account or simply wire the funds from the Solo 401(K) Plan bank account. No longer would you need to ask a custodian for permission or have a custodian sign the real estate transaction documents. Instead, with a self-directed Solo 401(K) Plan, as trustee of the Solo 401(K) Plan, you will be able to execute the real estate transaction by simply writing a check.