SIPPs – What if I don't have enough funds for a purchase?
If your client or your client’s business owns a commercial property, then transferring their property into a SIPP can be very beneficial. Yorsipp SIPPs are flexible. If your client doesn’t have enough funds in their pension scheme for an outright purchase then a commercial loan can help fund the difference. A SIPP can borrow up to 50% of its net value.
The majority of commercial properties – such as retail buildings, offices, industrial spaces, hotel and even leisure facilities – can be held or transferred into a SIPP or a SSAS. These pension plans allow your clients to save for their retirement in a tax efficient manner, and can also be a strategic move to grow their business as the following example shows:
- Purchase – The pub has a commercial valuation of £200k. Mr Robson only has c£150k in his pension fund so he asks Yorsipp to apply for a loan to make up the difference (he can borrow up to 50% of his net SIPP value).
- SIPP – A SIPP is established and the funds from the SIPP are transferred to the seller (in this case, the member’s business) – Yorsipp Trustees now hold the asset.
- Tax efficient – The rent paid into the SIPP is free of income tax and any growth in the value of the property is free from CGT.
- Surplus cash from rent payments less any fees/charges and loan repayments can be used for investment
- Sale – 10 years later Mr Robson sells the pub for £300k
(The final value of your SIPP is not guaranteed and will depend on a number of factors including, payments received, duration of investment, charges paid and the performance of your chosen investments.)
If your client or your client’s business owns a commercial property then transferring their property into a SIPP can be very beneficial.
The figures are indicative only and do not fully take into account Yorsipp’s fees, any adviser charges that may be due and the legal fees and disbursements it will cost to acquire part of the property or eventually the full property.
Yorsipp are authorised and regulated by the Financial Conduct Authority under reference 464198 but are not authorised or regulated to provide financial advice. The above guide is intended for use by financial advisers only and is based on a simplified case scenario and should not be construed as being indicative of a specific case or clients’ circumstances. Yorsipp will only accept new SIPP applications from a suitably qualified financial adviser. Consideration will also need to be given for legal fees/disbursements, Yorsipp’s fees, any adviser fees and any other costs associated with the property.