SIPP and Buying land

Davidbluee222

Can I buy a plot of land with a SIPP? I was looking at buying land for my wife and daughter to keep horses on. A friend told me that it is possible to buy land with a pension as long as it was not residential.

Anyone know if this is possible and if there are any stipulations?

dunstonh

Anyone know if this is possible and if there are any stipulations?

It is possible subject to trustee approval. There are many stipulations and it wont be cheap and costs continue on a regular basis. As the land will not actually generate any income itself but be a constant drain on capital, you would need to keep the SIPP topped up with cash to pay the various bills. You will also be compromising your retirement provision.

Aegis

dunstonh wrote: »

It is possible subject to trustee approval. There are many stipulations and it wont be cheap and costs continue on a regular basis. As the land will not actually generate any income itself but be a constant drain on capital, you would need to keep the SIPP topped up with cash to pay the various bills. You will also be compromising your retirement provision.

The SIPP would also need to charge a market rent for the use of the land by a family member, so it won't be available for use as a freebie either.

mania112

Right, so its easier to think of it NOT as 'it can't be residential' but more 'it must be COMMERCIAL'.

It needs to be something that generates income.

atush

David, given you have just escaped from one scam, why try to get into another? Land scams are rife.

If your family wants a field- buy one. Use it and love it.

If you want a pension, use conventional funds and investments.,

zagfles

This is the fundamental misunderstanding which caused the govt to ban residential property in SIPPs. People thought they'd be able to buy a holiday home within a SIPP and use it before retirement!

You cannot benefit from anything you buy within a SIPP before you crystallise it, otherwise it's simply a tax dodge to get tax relief on a hobby, holiday etc. Or if you do benefit from it, you'll have to pay a market rates for its use to the SIPP (which you will not get tax relief on).

System

zagfles wrote: »

You cannot benefit from anything you buy within a SIPP before you crystallise it, otherwise it's simply a tax dodge to get tax relief on a hobby, holiday etc. Or if you do benefit from it, you'll have to pay a market rates for its use to the SIPP (which you will not get tax relief on).

Not quite true. You can buy commercial premises for your company, and get tax relief on the market rental the company pays to the SIPP.
Also any capital appreciation on sale will be free of CGT, whereas it would be taxed if owned directly by the company.

zagfles

Clifford_Pope wrote: »

Not quite true. You can buy commercial premises for your company, and get tax relief on the market rental the company pays to the SIPP.

Well obviously if it's a genuine business expense, just like rental of any premises. That's not pension contribution tax relief, which is what I meant.

Also any capital appreciation on sale will be free of CGT, whereas it would be taxed if owned directly by the company.

As with any pension investment. The SIPP and the company should be independant, so it should make no difference whether you invest in a commercial property in your SIPP and let it out to some other company, and your company rents from someone else, or you rent from your own SIPP.

mania112

zagfles wrote: »

You cannot benefit from anything you buy within a SIPP before you crystallise it, otherwise it's simply a tax dodge to get tax relief on a hobby, holiday etc.

The closest you can get to that is if you like a drink.

You're allowed living accommodation within a pub you own and run.