Using a private pension to help fund a property.

bristoldad

At the moment I am trying to buy a property and could do with some extra cash, so I was wondering if it would be possible to use my SIPP pension?
I know pensions tied up when it comes to getting money out but I was thinking maybe it would be possible to use your pension as a shared equity stake to fund buying a property and pay your pension fund a rent on the pension portion of the property, not sure if this would be feasable.

dunstonh

At the moment I am trying to buy a property and could do with some extra cash, so I was wondering if it would be possible to use my SIPP pension?

Not unless it is a commercial property.

CannySaver_2

Is the property you want to buy commercial or residential in nature?

Peter23

Hi
My wife is a dentist and owns her practice building, although she has a mortgage on it. The building is worth around £400k, so more than the £230k annual SIPP limit allowed. Can she transfer part of the building into a SIPP in the first year, and then do the rest later?

thenudeone

Peter23 - you need to discuss this with a specialist SIPP provider who allows unusual investments, for example Curtis Banks (there are others).
They were very helpful when I wanted to buy unlisted shares in my employer's company through a SIPP.

CannySaver_2

Peter23 wrote: »

Hi
My wife is a dentist and owns her practice building, although she has a mortgage on it. The building is worth around £400k, so more than the £230k annual SIPP limit allowed. Can she transfer part of the building into a SIPP in the first year, and then do the rest later?

Hi

A few comments:

1. I'm not sure what you are refering to when you talk about the "£230k annual SIPP limit allowed". The limit of personal contributions is £50,000 in a single tax year unless you use carry forward. There is no limit on the level of employer contributions providing it can be justified based on a variety of factors

2. If your wife wanted to get the building into the pension there are a variety of ways to do this dependent on who owns it at the moment. For example a pension contribution could be made by your wife or her business as her employer and then the buiding bought as a whole or in 'slices'. As an alternative if the business owns the building then in specie contributions could be made using the building. However this may be complicated by the fact the borrowing

3. A SIPP (or indeed a SSAS) can borrow up to 50% of the scheme's assets. If the building is currently geared above that level then you may face issues. You should also be aware that even if the loan to value is below 50% the lender may see it as an excuse to rejig the loan conditions, potentially put the interest rate up and charge another arrangement fee

4. SIPP providers are generally unwilling to provide advice and accept applications for SIPP property purchase directly, there is a link below for SIPPs which accept property purchase and as you will see not every SIPP will accept direct applications. I would suggest you seek advice from a firm of IFAs specialising in this type of arrangement, I really do feel it would be money well spent

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

I hope this helps.

The Canny Saver

CannySaver_2

thenudeone wrote: »

Peter23 - you need to discuss this with a specialist SIPP provider who allows unusual investments, for example Curtis Banks (there are others).
They were very helpful when I wanted to buy unlisted shares in my employer's company through a SIPP.

I'd respectfully suggest speaking to an IFA who specialises in this area instead of the SIPP provider.

Speaking to the SIPP provider will just give you their house view and they are unlikely to be able to give specific advice. An IFA specialising in self invested pensions is likely to be better placed to answer your query and give advice.

The Canny Saver

jamesd

It's entirely possible to do this. The practice would normally pay rent into the SIPP. It's a very common arrangement. Borrowing with a mortgage is fine up to 50% and can make life easier.

CannySaver_2

One thing I forgot to mention is that the current owner of the property, whether it is an individual or business, will have to pay tax on any profit made on the rise in value of the property. Subject of course to the normal exemptions.

Just something to factor into your calculations.

The Canny Saver

System

CannySaver wrote: »

There is no limit on the level of employer contributions providing it can be justified based on a variety of factors

I think it is subject to the same £50,000 limit (unless using carry forward).

It has to be a legitimate business expense to qualify for tax relief, so the employer's contribution has to be reasonable in relation to the employee's worth to the company.

There are of course no limits to anybody's pension contributions if you don't mind not getting tax relief.