How do people put rental houses in 401k's?

[Craigslist]

How do people put rental houses in 401k's? If the limit is like 58k for employer/employee, how do you put a house inside your 401k, wouldn't you over contribute for example if a house is 500k, you need to put up 100k for 20%.

[abds]

Theoretically if you have multiple years of savings in your self-directed solo 401k, you could have hundreds of thousands of dollars. Then you use that money to buy whatever it is you want to buy. Just like if you $5M in your 401k you can buy $5M worth of a fund in your 401k with it.

You might not want to put real estate in a tax-deferred account, as you'd miss out on tax benefits of depreciation, etc. Or maybe you do want to.

[VirginiaMD]

abds, can you talk more about real estate in tax-deferred accounts? I am thinking of buying into a private equity real estate fund in a Self-directed IRA. But I am trying to understand if I'm missing out on tax advantages by using a tax-deferred account. My understanding is that, with a private equity fund, the losses are passive, so I would have to have REPS status to take advantage of any tax benefits. So if I don't have REPS, it shouldn't matter whether the fund is held in a tax-deferred account vs. a brokerage account? Does that sound right?

[Tim]

abds, can you talk more about real estate in tax-deferred accounts? I am thinking of buying into a private equity real estate fund in a Self-directed IRA. But I am trying to understand if I'm missing out on tax advantages by using a tax-deferred account. My understanding is that, with a private equity fund, the losses are passive, so I would have to have REPS status to take advantage of any tax benefits. So if I don't have REPS, it shouldn't matter whether the fund is held in a tax-deferred account vs. a brokerage account? Does that sound right?

Losses in a taxable have carry forward and can offset other passive income. Not available in tax deferred. All the income is at the individual rate when withdrawn.
It is not the same.

[Molar Mechanic]

abds, can you talk more about real estate in tax-deferred accounts? I am thinking of buying into a private equity real estate fund in a Self-directed IRA. But I am trying to understand if I'm missing out on tax advantages by using a tax-deferred account. My understanding is that, with a private equity fund, the losses are passive, so I would have to have REPS status to take advantage of any tax benefits. So if I don't have REPS, it shouldn't matter whether the fund is held in a tax-deferred account vs. a brokerage account? Does that sound right?

Even without REPS, you can use losses from passive investments to offset gains from other passive investments. If you continue to purchase these types of investments, eventually you start to run out of losses and losses from other, newer, investments can offset passive gains. Likewise, eventually some of these will go round trip, and new investments can generate paper losses offset those gains.

[litovskyassetmanagement]

How do people put rental houses in 401k's? If the limit is like 58k for employer/employee, how do you put a house inside your 401k, wouldn't you over contribute for example if a house is 500k, you need to put up 100k for 20%.

Avoid in an ERISA 401k at all cost. You can buy real estate in a solo 401k/IRA. The cost can be quite high, you will need a service provider that also can accept this type of arrangement, and they charge quite a bit more money than a typical custodian. This will require a TPA to create a custom plan document and a specialty custodian. Also, this will require annual valuations. It is a lot of hoops to jump through. Plus there are issues associated with putting real estate in a tax-deferred account, so you'll definitely need to hire an attorney to help you.

[StarTrekDoc]

Really hard to find reasons to own real estate within tax deferred accounts.