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.