Purchase of Commercial Property Within Self Invested Personal Pensions
A SIPP may on its own, jointly with other SIPPs, connected or unconnected parties, invest in commercial property (including land, whether developed land, farmland or forestry) in or outside of the UK. This would include:
- Shops
- Offices
- Industrial Units
- Public Houses
- Nursing Homes
- Hotels and Guest Houses
Examples of joint ownership might be two SIPPs jointly owning the property from which their members trade as a partnership, or an individual and his SIPP jointly purchasing an office to let to a third party.
A commercial property with a residential aspect is generally not permitted unless it can be demonstrated that the residential element is an integral part of the property such as a caretakers flat or flat occupied by an employee as part of their terms of employment.
If you have a particular property in mind and would like to discuss its suitability or as an investment within a SIPP, please contact us.
A property may now be purchased directly from a member or a party connected with them. It may also be leased back to them provided all transactions are undertaken and are being evidenced as being on commercial terms.
Advantages of property investment within a SIPP are that any gain on the property when sold is free of any Capital Gains Tax. Any rental income received within the SIPP is free from income tax.
As well as being an opportune investment, the facility to own property for business use within a SIPP offers several attractive features. These include the acquisition of business property without direct capital expense to the business. Costs and disbursements are also payable from the SIPP fund. The property being owned outside of the business is also protected from creditors in the event of insolvency.
SIPPs may elect to register for VAT so that any VAT charged on a purchase or subsequent development or improvements can be reclaimed.
A SIPP may borrow by way of a commercial mortgage to assist in the purchase and/or development of a property. The maximum borrowing may not exceed 50% of the net assets of the SIPP at the date of purchase and may only be secured against the purchased property or other assets of the SIPP if necessary.
An advantage of using a Dentons SIPP is that we, as Administrators, do not insist upon use of a panel of valuers, or solicitors, nor do we insist upon the use of a property manager, providing the functions of a property manager are being met. We can also assist in introducing "property finders" and organisations keen to lend to SIPPs should these services be required.
If you would like a copy of our "Commercial Property Guide" brochure which elaborates further on the points mentioned above, please contact our Marketing Department by telephone or by e-mail with your details.
Phone 01483 521521
E-Mail enquiries@dentonspensions.co.uk