Sipp Pension - types of commercial property allowed

onthemend

Hello

I am looking to transfer my existing personal pension into a SIPP to allow more control and options with the fund.

I am looking at purchasing a guest house to run as a commercial venture and I cannot find out if this type of operation is allowed or not to be part funded by a SIPP. Searching on line appears to give both answers. Can anyone help?

thanks

xylophone

This seems to be because such a venture requires special consideration ( one of those famous 'grey areas') !
http://www.mwpensions.co.uk/handouts/SIPP-Guide%20to%20Property%20Purchase%20and%20Lease.pdf
http://www.healys.com/site/library/commercialclient/landlord/buying_property_through_a_sipp.html

SippTechie

If you are looking to live in and run the commercial venture yourself (or have anyone connected with you living there) then doing this would result in significant tax charges, so I would be surprised if you could find a SIPP operator who would consider it.

If you are looking to purchase the property and employ a manager to run the commercial venture then there is still a risk of tax charges if you don't organise the venture correctly. However it is possible to achieve if it is a condition of the employment of the manager that they live there. You'd still need to make sure that neither you nor anyone connected with you stayed there and, because of the difficulties a SIPP provider would have in policing this, many SIPP providers still won't allow it. However you will find some who will.

If you do succeed in finding one who will let you do this then the commercial venture will need to pay a rent to your SIPP - it doesn't work that your SIPP receives the income from the guests directly. This means, if you're not successful in finding guests who can help the commercial venture pay the rent to the SIPP, and the commercial venture falls behind with the rent you're going to face major problems - possibly more tax charges as HMRC frown on situations where a business owned by the SIPP holder doesn't pay rent to their own SIPP.

You're probably getting an idea of why many SIPP providers steer clear of guest houses!

CannySaver_2

Hi

To be honest I'm not sure you are going to find a SIPP provider to do this, however I have heard of hotel rooms being put in SIPPs, just not whole hotels.

The following link takes you to a list of SIPP providers who will allow commercial property in their SIPP:

http://www.!!!!!!.uk/sipp-zone/help-choosing-your-sipp/commercial-property/

You could simply spend some time calling them to find out whether a guest house is acceptable.

Alternatively of course you could pay an IFA to do the leg work for you.

I'd be interested in the response you get.

Regards

The Canny Saver