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LordAshon

Real Estate Tax Attorney. 1031 QI. If you own the current building solely it's not an arms length transaction, and you would not be able to sell or transfer the property into it to avoid taxes.


CRE_Energy

Next time you actually need to make the arms-length purchase in the self directed 401k.


ginginOZ

Good to know. I'm going to put this 401k back on my radar. As the new property is contract for deed. As in owner financed. As in I don't have the deed yet, I wonder if it's not too late. Perhaps I'm playing with fire though. Don't want to get burned.


CRE_Energy

If you haven't closed yet and it has sufficient funds to initiate the transaction, then yes IMO for the purchase. You would need to get any earnest money transferred back to you individually and replaced by 401k funds. You cannot personally guarantee a loan undertaken by the 401k, so consider long term financing implications. There are banks that will lend on these but LTV is worse. Lastly, there is not supposed to be any "sweat equity". If it's a renovation, you don't want to be in a position where you have receipts for materials but none for labor, for example. I don't think you can charge yourself for your labor...not sure on that. Definitely do some more research on what you can and can't do in that vehicle to make sure your case fits. Edit: I should write "initiate and sustain the transaction". Obv you can't contribute funds along the way beyond whatever annual contribution limits exist.


ginginOZ

I wanted to thank you for the time you took to respond. Several experts in my state I've spoken with re 1031 know absolutely nothing solo 401k . I wouldn't need financing on new place. I'll pursue this return of earnest money suggestion. Seller is a friend and if it's kosher, he'd likely cooperate.