ForumsReal Estate InvestmentsNew Build AirBnb Investment

Forums Solo 401k Real Estate Investments New Build AirBnb Investment

  • New Build AirBnb Investment

    Roger B. replied 11 months, 1 week ago 2 Members · 5 Posts
  • 4 Replies
  • Roger B.

    Top SubjectSolo 401k Contributions,Real Estate Investments
    Top ForumsSolo 401k Contributions, Real Estate Investments

    Roger B.

    Roger B.

    Top SubjectSolo 401k Contributions,Real Estate Investments

    August 6, 2023 at 5:10 pm

    Hello,

    A plot of vacant land next to my home is for sale, and I’m looking into purchasing it with funds from my 401k to build an AirBnb. Would a new construction of this sort be permissible? I know investment properties have to be completely “hands off” / managed by someone else–but could I custom design the build as long as I do not directly participate in the construction?

    A few other questions:

    – I understand that if I were to do this with a “TIC”, using both my 401k and personal funds, I could not use financing and would have to be able to prove to the IRS that I could have made the purchase solely with personal funds. Would I have to prove that I could have made a cash purchase solely with personal funds, or would I just have to show that I could have obtained a mortgage that would cover the purchase?

    – Could a boyfriend / girlfriend manage the AirBnb, or would they be considered a disqualified person?

    – Are long-term and short-term rental income (namely AirBnb) subject to the same taxes for an investment property purchased with someone’s 401k?

    Thank you!

    Roger B.
  • Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    Mark Nolan

    Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions

    August 7, 2023 at 3:55 pm

    1. Correct that you can’t perform sweat equity work on the property, but as the trustee of the solo 401k you could manage the property provided you don’t receive compensation. The trustee of the solo 401k (you) is required to look after the assets of the solo 401k plan.

    2. Generally, you would need to substantiate that the purchase could have been made with all cash or using a mortgage.

    3. A boyfriend or a girlfriend are not referenced on the list of disqualified individuals. See the list on the following page: https://www.mysolo401k.net/solo-401k/investments/

    4. See the following regarding how UBIT may apply to short-term rentals.

    https://www.mysolo401k.net/airbnbn-solo-401k-rental-income-ubit-considerations/

    https://www.mysolo401k.net/ubit-and-udif-differences/

Related Blog Posts

Log in to reply.