Starting a Sipp, but in a few years buy commercial property back from myself

Yorkshirenit

Hi, new here looking for some help regarding starting a SIPP. I have never had a pension always invested in property. Feel lost in how to get started. Me and my wife currently run a ltd company business as our main income. We own the commercial premises outright, our ltd company pays us rent. Also have a few buy to lets residential houses. 

I am wanting to open a SIPP for us both and every March our ltd company will put an amount into the SIPP. I will then let it build up until I have enough to purchase the commercial property off ourselves. Everyone I speak to says it is a great idea but I cant get any advice on how to actually do it.

It seems easy to set up a SIPP and invest in a fund. But it seems very difficult even getting information on how you would actually then go about buying commercial property within it. I have a read as much as I can and it seems difficult with lots of red tape, legality issues and lots of fees from solicitors, valuers and SIPP providers.

Anyone here actually have a SIPP and know how it all works?

The property is worth approx. £200,000, with rent of about £20,000. I would look to pay £40,000 a year into both SIPPs so would take me approx 5 years to have enough.

Thanks

Marcon

Yorkshirenit said:

Hi, new here looking for some help regarding starting a SIPP. I have never had a pension always invested in property. Feel lost in how to get started. Me and my wife currently run a ltd company business as our main income. We own the commercial premises outright, our ltd company pays us rent. Also have a few buy to lets residential houses. 

I am wanting to open a SIPP for us both and every March our ltd company will put an amount into the SIPP. I will then let it build up until I have enough to purchase the commercial property off ourselves. Everyone I speak to says it is a great idea but I cant get any advice on how to actually do it.

It seems easy to set up a SIPP and invest in a fund. But it seems very difficult even getting information on how you would actually then go about buying commercial property within it. I have a read as much as I can and it seems difficult with lots of red tape, legality issues and lots of fees from solicitors, valuers and SIPP providers.

Anyone here actually have a SIPP and know how it all works?

Probably wise not to attach too much importance to people who say something sounds great but haven't actually got a clue what's involved!

Make sure you open a SIPP with a provider who allows you to hold commercial property, if that's what you decide to do. There aren't many and yes, it isn't anything like as simple as the more mainstream investments like shares. 

Have you considered a SSAS (Small Self Administered Scheme) as an alternative, which given your objectives might be a better idea? Given you've had no experience in the field of pensions, probably not one you've come across - but a chat with a good independent financial adviser would ensure you know all the options and which one (if any) is most likely to best suit your needs and aspirations. Meanwhile some general info on SSAS: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/defined-contribution-small-self-administered-pension-schemes 

Yorkshirenit said:

The property is worth approx. £200,000, with rent of about £20,000. I would look to pay £40,000 a year into both SIPPs so would take me approx 5 years to have enough.

Thanks

Five years if you're paying in a total of £80K a year...or do you mean £20K into each pension (I think you probably do, just checking!)?

Tucosalamanca

SSAS as mentioned above.
Since you already own the freehold, you won't need to wait five years, as you're effectively buying it from yourself.
Yes you will have some initial expenses and ongoing costs but there are very good tax reasons which make it all worthwhile.

Assuming that you have a good accountant, rather than a book keeper, paying for an hour's appointment to learn a little about SSIS and how you might benefit, will be money well spent....
The accountant will probably have an IFA contact who can help with setting up and administration of the scheme.

SSAS pensions: small self-administered schemes | MoneyHelper

Yorkshirenit

Thanks for the quick reply's. I have never heard of SSAS pensions, will look into it. 

poseidon1

Yorkshirenit said:

Hi, new here looking for some help regarding starting a SIPP. I have never had a pension always invested in property. Feel lost in how to get started. Me and my wife currently run a ltd company business as our main income. We own the commercial premises outright, our ltd company pays us rent. Also have a few buy to lets residential houses. 

I am wanting to open a SIPP for us both and every March our ltd company will put an amount into the SIPP. I will then let it build up until I have enough to purchase the commercial property off ourselves. Everyone I speak to says it is a great idea but I cant get any advice on how to actually do it.

It seems easy to set up a SIPP and invest in a fund. But it seems very difficult even getting information on how you would actually then go about buying commercial property within it. I have a read as much as I can and it seems difficult with lots of red tape, legality issues and lots of fees from solicitors, valuers and SIPP providers.

Anyone here actually have a SIPP and know how it all works?

The property is worth approx. £200,000, with rent of about £20,000. I would look to pay £40,000 a year into both SIPPs so would take me approx 5 years to have enough.

Thanks

I assume you have not missed the fact that pension pots will become liable to IHT after 2027.

Worth thinking about the consequences on the Sipp/ SSAS finding the necessary  liquidity to pay its share of the tax in due course. Hopefully, the 10 year instalment plan would be available when the situation arises.

in fact you may have similar liquidity issues with the BTL portfolio, so worth considering life assurance in trust, if you have children you plan to ultimately leave all these assets to.