Commercial Property SIPP
One of the most exciting areas of investment
for a pension is a commercial property
SIPP. You can gear your investment by borrowing money to
assist with the purchase.
Property
Funds
A collective
investment fund gathers together money from individual investors to create a
large fund of money. Property funds are usually invested in commercial property, property-related assets and
will sometimes hold substantial amounts in cash. The funds are managed by a team of experts to maximise the
potential for growth and spread the risk.
Personal Funds
A popular use of SIPPs is to purchase
individual commercial property. The SIPP can borrow up to 50% of the net pension fund value and use the rental
income to repay the loan. There is no tax on the rent paid to the SIPP.
The most straightforward way most larger pension
funds use a SIPP is to buy their own business premises. this allows for several tax advantages,
from the growth of the property being free capital gains tax, to the fact that the rental income will be paid
directly into the SIPP hence allowing for further pension growth.
Additionally, the SIPP is also allowed to borrow up to 50% of the value of it’s
fund.As an illustration of the way this works, if a pension pot is worth £200,000, it can borrow up to £100,000 so
that a total of £300,000 can be used to buy a property.
Commercial Property SIPP
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