Property

A popular investment within a self invested pension arrangement is property. This can either be achieved through property related funds or direct purchase.

The benefit of owning property within a SIPP is tax efficiency on rental income and any capital gain on the disposal of property. The following points provide an overview on owning property within a pension arrangement:

• Only commercial property can be directly held

• The pension arrangement can borrow up to 50% of the net scheme assets to finance the purchase

• The pension scheme can either hold the property in full or jointly with others (either individuals, other pension arrangements or a company)

• The property title is owned by the pension scheme trustees who are City Trustees and the scheme member

• Whilst the property may be sold at any time, the proceeds must remain within the pension scheme for the provision of pension benefits

• All transactions, whether purchase price, loans to finance the purchase, rental income or sale price must be on a commercial basis

• Transactions between the scheme member and the pension are allowed (subject to commercial terms above)

• VAT and environmental surveys should be considered in all cases

• Professional advice should always be sought on property transactions