Self Directed 401k Investing (Roth vs Trad)
So I was reading the BP tax books and a thought popped in my head.
I’m 26 and work as an Engineer making decent money, contributing to a Roth 401k.
My thought is to self direct my 401k to buy a rental once their is enough in the account (while working on rentals with normal income of course. Rehabbing one now.)
If I direct my 401k money to buy a rental property, I’ll have to pay taxes on the income that property produces. I’m not currently taking the retirement deduction because the account is a Roth. If my account is Roth or Traditional I still have to pay the taxes on the income once the property is purchased. Would if it make more sense to use a traditional 401k to take the deductions now as well if I’m going to pay the taxes on the rental income regardless?
Can any CPA’s shed light on this situation? Not sure if I’m missing something. It seems like I’m paying taxes on the income now and I’ll pay taxes on the rental income after the self directed purchase. Thanks for any input!