What you can put into a SIPPS
pension
Direct property investment
One of the most popular investments, especially for the
growing army of small business owners who have set up a
SIPP, is direct investing in commercial property.
Specifically their own business premises.
The rules allow for a person to borrow up to 50% of the
value of their pension pot to fund the purchases of a commercial
property.
So a fund of £100,000 could be used to buy a property
worth £150,000.
There are a couple of important things to remember
when investing your pension in you own business premises
/ property
Firstly the company must pay a fair market rent
into the pension fund for use of the building.
... and secondly it is never a good thing to put all your
eggs in one basket.
Think very carefully before putting all of your pension
into one single asset , no matter how much it would help
your business.
Pension experts also warn against trying to be
too clever with commercial property in a pension.
Several tell tales of woe, when clients have insisted against
advice on putting in an old paint works, or petrol station,
into their fund, hoping to benefit from the site's redevelopment,
only to get thumped with a bill for an environmental clean-up,
when it later transpires the site is contaminated.
Finally, don't forget to check what a SIPP
provider will charge.
Providers who offer discretionary management of your SIPP
(that's where they chose investments for you) and those
that offer property will invariably charge an annual fee
- usually a percentage of the pension's value.
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