Property as pension fund ?!...
Discussion
Hi All,
Does anyone know what to pro's and con's are of buying property as a pension fund? I've spoken to afew people and the opinions vary on weather you can have residential or just commercial property etc.
Can this be done as a group of people?
Any thoughts would be helpfull - thanks in advance..
Are you talking in the general sense as "I would prefer to invest in property rather than pay into a pension fund" or are you asking "can investment in land and property be part of the assets acquired as part of a pension fund investment portfolio?"
Different scenarios entirely.
>> Edited by Eric Mc on Friday 26th November 09:06
Different scenarios entirely.
>> Edited by Eric Mc on Friday 26th November 09:06
I'm going to assume that you mean buying a property using your pension fund? I've recently done this.
You need to convert your pension fund into a SIPP (do a search for information). A SIPP can buy commercial property and from April 2006 will be able to buy residential property (and aparently anything else that can be proved to be a good investment - 250 GTO SWB anyone?). Currently the SIPP can get a mortgage on the property up to 70% of the property's value. From April 2006 this will reduce to only 50% of the fund's value IIRC. So big advantage to buy commercial property now as you can buy something worth a lot more than your fund. Several people can group their SIPPs together to buy one property - I did it with a business partner.
Be warned though - it's quite a painful process, as to avoid you raiding your fund or taking undue advantage of the tax benefits, it's all taken out of your hands and managed by the fund's nominated trustees. It must be rented out at market rate so you can't use it to reduce your businesses overheads. All of the fees charged are very high.
Generally, very tax advantageous and a good way of converting your pension into something you can make use of and should be worth something when you come to retire.
You need to convert your pension fund into a SIPP (do a search for information). A SIPP can buy commercial property and from April 2006 will be able to buy residential property (and aparently anything else that can be proved to be a good investment - 250 GTO SWB anyone?). Currently the SIPP can get a mortgage on the property up to 70% of the property's value. From April 2006 this will reduce to only 50% of the fund's value IIRC. So big advantage to buy commercial property now as you can buy something worth a lot more than your fund. Several people can group their SIPPs together to buy one property - I did it with a business partner.
Be warned though - it's quite a painful process, as to avoid you raiding your fund or taking undue advantage of the tax benefits, it's all taken out of your hands and managed by the fund's nominated trustees. It must be rented out at market rate so you can't use it to reduce your businesses overheads. All of the fees charged are very high.
Generally, very tax advantageous and a good way of converting your pension into something you can make use of and should be worth something when you come to retire.
AlexHancock said:
...... It must be rented out at market rate so you can't use it to reduce your businesses overheads. All of the fees charged are very high.
but you are effectively using your business to pay money back to yourself, so its still a damn good idea. Charge even more rent to yourself and watch your pension fund grow!
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