December 24, 2009 | 
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A Self Invested Personal Pension puts the investor in control of their own pension planning. In other personal pensions and stakeholder pensions the investor can be at the mercy of the fund manager, however with a SIPP the investor has control and flexibility.
SIPPs can be sophisticated, complicated and costly, they can however, provide excellent tax planning solutions and provide an investor with more control over their pension planning through greater investment options.
A SIPP is most suitable for the self employed who enjoy good incomes, as administration costs are greater than ordinary pensions.
You can invest in a number of different asset classes through a SIPP, however purchasing commercial property as part of a SIPP portfolio can be particularly beneficial for purchasing ones own business premises.
Self Invested Personal Pensions like any pension are designed for long term retirement investment. A recent fall in property prices is seen as an excellent buying opportunity for long term gains on commercial property. You can invest in commercial property to either lease to yourself or a third party.
This fall in commercial property prices coupled with a lack of finance from banking resources has made buying part or all of your commercial property through your SIPP very beneficial to the business.
When a SIPP fund buys a commercial property it becomes free from capital gains tax and the rental income is paid directly to the SIPP allowing your pension fund to grow further.
You can also borrow to finance the commercial property purchase. You can mortgage 50% of the net value of these funds. (e.g. £100000 available in a SIPP can part fund commercial property worth £150,000.)
On buying commercial property with a SIPP it is always recommended to maintain a level of cash in your SIPP fund for unexpected property costs, mortgage payments, VAT or insurance premiums and property maintenance. This is dependent on each property.
You can also opt at any time to sell your property within the SIPP and the completed monies remains in your SIPP fund, however you must note that any estate agent fees, valuation fees etc must be paid from the SIPP.
In summary for the more sophisticated investor who is seeking to take control over their retirement planning and assisting the balance sheet of your current business SIPPs are an excellent opportunity.
For Independent Financial Advice please contact me on elaine.porter@justdoproperty.com
If you would like to ask Elaine a question click here
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Categories: Property Mentors, SIPPs |
Tags: Commercial Property, Control, Elaine Porter, Pension Planning, Self Invested Personal Pensions, SIPP, Tax Planning | 
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