Acceptable property to be held within a SIPP or SSAS must be commercial, located in the UK and can be either freehold or leasehold. We outline examples of commercial property that can, and cannot, be held in a SIPP and SSAS.
We've outlined below some types of commercial property that can be held within a Dentons SIPP or SSAS:
Acceptance of any commercial property is subject to satisfactory due diligence and Dentons will review all property purchases on a case-by-case basis*. Non-permanent fixtures and fittings must be excluded from the property purchase otherwise they can give rise to a tax charge.
In all cases our Commercial Property Questionnaire must be completed and returned to us for our review and prior acceptance. If it is land only, we will also require a map/plan of the land showing boundaries, access points and a business plan to show it is commercial and will provide a return to the pension scheme.
Commercial property held in a SIPP or SSAS can be developed or refurbished provided no residential element is added. Similarly, land can be purchased and used to develop commercial premises. We will need to see written quotations and details of the proposals so we can authorise the improvements or development prior to any work taking place.
If you or a connected persons' business is to undertake the property development/refurbishment, we will require quotes from that business along with quotes from at least two other unconnected businesses for comparison purposes.
If a pension scheme becomes involved in the frequent purchase and/or development and selling of commercial properties, HMRC may deem such transactions as 'trading'. Whilst both capital and income investment gains are normally tax exempt if trading applies any associated income and capital gains would then be taxed accordingly. If you have any queries on whether a property is suitable to be purchased by a Dentons self invested pension please contact us.
*HM Revenue & Customs (HMRC) impose tax penalties if certain types of property are acquired. We reserve the right to refuse property purchases and/or any proposed developments of property if we believe that the purchase or development may give rise to a tax charge or there are unacceptable levels of potential risk such as contamination.
Whatever your retirement needs, one of our experts will be happy to discuss how we can help you achieve your goals.