how to deduct investments property expenses with a Solo 401k

[Joy Downs]

We have recently been introduced to the Solo 401K and are getting ready to switch our other investments over to it.  We are primarily interested because of the ability for property investment.  This brings me to the question.  How are expenses paid for by the trust tax deducted, i.e. roof replacement, plumbing and electrical expenses, etc?

[Brian Eastman]

@Joy Downs

Your phrase "transfer our other investments" seems to have folks confused. Yes, if those investments are simply conventional market based holding in a prior employer retirement plan, you can rollover to a self-directed IRA or Solo 401(k). Seems everyone only wants to think of "real estate" as an investment today.

You would have to have eligible self-employment income in order to sponsor a Solo 401(k) plan.

When a self-directed Solo 401(k) or IRA invests in real property, the income is generally not taxed. As such, there is no place to apply deductions. It is an entirely different paradigm than investing in real estate personally. The question is whether the investments you might make in real estate with a self-directed retirement plan would produce better results for the retirement plan that leaving it invested as it is currently.