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How does purchasing a property work as a SIPP investment?

The scheme can invest in a UK commercial property and benefit from receiving the rent free of income tax and increases in property value free of Capital Gains Tax. If you invest in a commercial property however, you would be required to become a co-trustee along with Liberty Trustees Ltd.

When considering the feasibility of investing in property and the level of return you could expect, you need to take into account the cost of the acquisition, including stamp duty, and any professional fees, all of which are met by the scheme's funds. You should also consider whether the rental income covers any mortgage repayments and administration costs. You may need to put in a contribution to make up any shortfall.

The scheme can own all of the property or a percentage of it jointly with other Liberty SIPP members, or any other connected or unconnected party. The rental income would be split proportionately to the investment split, as would the proceeds on the sale of the property. This flexibility is particularly beneficial if a property is to be transferred as an "in-specie" contribution. You could decide the percentage the scheme would own to benefit from maximum tax relief and to mitigate any CGT.

 

Please note the value of investments, and any income from them can go down as well as up and you may not get back your original investment. We do not offer advice about the suitability of our products or any investments held within them. Should you require financial advice you should consult a suitably qualified financial adviser

 

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