I have an S Corp with a dba retail store location (coffee shop). I want to purchase a rental property somewhere to lease out to a tenant (not myself). Can I purchase the property using pre-tax dollars from the dba and write it off as a business expense?

ANSWER

The BIDaWIZ Team's Answer:

Generally speaking, you cannot use pre-tax profits to purchase real estate. However, there are instances within the tax code that allow self-directed IRA/401(K) holders to purchase those assets. Essentially, you would be contributing pre-tax business profits to your retirement account, which in turn could be used to purchase real estate property. There are many restrictions, but it may be possible for your situation. The list of prohibited transactions are listed in IRC Section 4975.