Using Non Recourse Financing with a Solo 401k plan
A non-recourse loan is a powerful investment tool that allows real estate investors to leverage their investment with a Solo 401k plan. In this Solo 401k Quick Tip video, Sense Financial explains more about the non-recourse loan for the Solo 401k plan:
Using Non Recourse Financing with a Solo 401k plan
A non-recourse loan is a loan that is not guaranteed by the individual. Instead, the non-recourse loan is secured by and limited to the collateral. For real estate investment within a Solo 401k, the real estate property itself is the collateral. Because the loan does not involve the account owner, it is not considered a prohibited transaction by the IRS. Therefore, it is allowed to finance real estate in a retirement account using non-recourse loan. Please note that unlike Self-Directed IRA, Solo 401k is exempt from UDFI Tax on leveraged real estate.