Increasing numbers of investors are seeing the benefits of a Self Invested Personal Pension (SIPP) to purchase UK commercial property, or for UK commercial property to be transferred in to a SIPP as a contribution (subject to HMRC rules).
“Our SIPP property team are proud to make your property our business”
GPC SIPPS’s property department has been particularly successful in dealing with commercial property held within the SIPP wrapper. We have developed efficient systems and built strong relationships with other professionals in order to secure a place in the market with a reputation for a smooth and speedy process.
There are many potential benefits from this and some include:
- Any growth in the property value when held in a SIPP is free from Capital Gains Tax (although if the property is already owned by you when it is ‘sold’ to the SIPP, CGT may be payable at that time).
- Tax relief for business use – if your business is leasing the property from your SIPP, the rent your business pays is an allowable business expense.
- To help you pay for the property with your SIPP, the scheme can take a mortgage up to 50% of the net asset value of the pension fund.
- Tax free rental income – If your SIPP charges £1,000 monthly rent to a business using your commercial premises then £1,000 would NOT be subject to any tax because it is reinvested in the SIPP.
Basic Parameters of Commercial Property Purchase
- Non Residential – development, land, offices, workshop, shop, warehouse, factory, nursing home, etc.
- If the purchase involves a connected party the transaction it must be on a commercial basis i.e. it must be an arms length transaction at market value supported by an independent valuation.
- Borrowings – The GPC SIPP can borrow up to a maximum of 50% of the scheme’s net fund value.
- The property can be rented back to member’s own company
- Investments grow free of income tax and Capital Gains Tax
- Joint Property Purchase – a scheme can buy a property jointly with another GPC SIPP scheme(s), individual (including the member personally) or another company or entity.
Call us on 01254 660 333 and speak to one of our property specialists whom will guide you through the process.
The value of investments can go down as well as up, so you could get back less than you invest. To help you make a decision it is important that the risks and commitments are understood and acceptable to you. The products or services referred may not be suitable for everyone. If you are unsure of the suitability of any product, you should contact a / your Financial Adviser.