ombskid Posted September 22, 2008 Posted September 22, 2008 Sole proprietor who is a real estate broker wants to buy residential property and rent it out until some alleged future day when it is worth much more, then sell it. 1. Can a plan get a mortgage to buy this investment property. 2. Is the plan exempt from ubit? 3. Could the trustee (also the sponsor and participant) sign personally for the mortgage.
J Simmons Posted September 22, 2008 Posted September 22, 2008 1 & 2. If you get a mortgage (leveraging the purchase), you will have UBTI. 3. TEE signing personally mortgage = PT. Also, if the property is more than 5% of the plan's assets, you'll blow the small employer exemption from the annual, independent audit requirement. John Simmons johnsimmonslaw@gmail.com Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.
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