Commercial Property Purchase Using A SIPP or SSAS
A self-invested pension can be an effective way for a company, partnership or sole trader to buy commercial property. The property can be let to a third party or the parent business allowing the rent paid by the firm to boost the pension fund rather than enriching a landlord.
Normally the whole of the lease payment will qualify for tax relief giving rise to an advantage over the partnership or business purchasing the property where only the interest element attracts tax relief.
Although many favour commercial property it is an investment like any other and it can rise or fall in value ultimately affecting the benefits available at retirement. It also takes time to sell property and contingency plans should be considered to cover the event of death, leaving service or retirement of one of the parties.
You may well find it attractive to consider purchasing the practice property or indeed another commercial property via a SIPP. It is no barrier if you personally own the property already provided the sale is done on normal commercial terms.
The purchase of residential property is not permitted.
A significant advantage is that contributions used to purchase the property will be made out of your company or personal income before tax. This tax relief will provide more cash to purchase the property so it should be bought quicker.
Your pension fund may not be of a sufficient size to able to purchase the property outright at commencement. The pension fund can borrow money off a bank or lender in order to buy the property. The maximum permissible borrowing is 50% of net scheme assets and we can advise you on finding appropriate lenders. A property may also be owned jointly between you personally, your business and your pension fund.
We have provided SIPP and SSAS advice to clients in Brighton, Hove, Sussex, London, Reading and the South East for many years. If you would like a 'no obligation' chat about the choices available to you, please contact us.
The value of investments can fall as well as rise and you may get back less than the amount invested.
Normally the whole of the lease payment will qualify for tax relief giving rise to an advantage over the partnership or business purchasing the property where only the interest element attracts tax relief.
Although many favour commercial property it is an investment like any other and it can rise or fall in value ultimately affecting the benefits available at retirement. It also takes time to sell property and contingency plans should be considered to cover the event of death, leaving service or retirement of one of the parties.
You may well find it attractive to consider purchasing the practice property or indeed another commercial property via a SIPP. It is no barrier if you personally own the property already provided the sale is done on normal commercial terms.
The purchase of residential property is not permitted.
A significant advantage is that contributions used to purchase the property will be made out of your company or personal income before tax. This tax relief will provide more cash to purchase the property so it should be bought quicker.
Your pension fund may not be of a sufficient size to able to purchase the property outright at commencement. The pension fund can borrow money off a bank or lender in order to buy the property. The maximum permissible borrowing is 50% of net scheme assets and we can advise you on finding appropriate lenders. A property may also be owned jointly between you personally, your business and your pension fund.
We have provided SIPP and SSAS advice to clients in Brighton, Hove, Sussex, London, Reading and the South East for many years. If you would like a 'no obligation' chat about the choices available to you, please contact us.
The value of investments can fall as well as rise and you may get back less than the amount invested.