QUESTION: I think I know the answer to this but so far I haven't been able to find anything on the internet that directly says you cannot do this. My realtor wants to open a solo 401k and then buy a property that is 75% owned by himself and 25% owned by the solo 401k. Is this possible if you keep good records and show that 25% of the expenses and income are coming from or going to the solo 401k?
ANSWER:You are correct that it is prohibited for the solo 401k owner to purchase a property that has ever been owned by him or her. This would be in violation of the following rule.
Sale, exchange, or leasing of property between a plan and a disqualified person;
See following links for more information.
http://www.mysolo401k.net/self-directed-401k-prohibited-transaction-4975/
http://www.mysolo401k.net/prohibited-transactions-solo-401k/
ANSWER:You are correct that it is prohibited for the solo 401k owner to purchase a property that has ever been owned by him or her. This would be in violation of the following rule.
Sale, exchange, or leasing of property between a plan and a disqualified person;
See following links for more information.
http://www.mysolo401k.net/self-directed-401k-prohibited-transaction-4975/
http://www.mysolo401k.net/prohibited-transactions-solo-401k/
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