Self Invested Personal Pensions
© ACD Financial 2007
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In Specie Transfers:
Where there is a transfer from another pension arrangement, which holds a property, the property does not have to be realised to transfer the benefits. Instead, so long as the SIPP provider agrees to accept this property, the property can be transferred ‘in specie’. The market value of the property will represent part of or the whole amount of the transfer value. Property can even be ‘paid into’ a SIPP in lieu of a cash contribution. In spite of the above drawbacks, there are a number of attractions of putting property into a pension scheme: All legal costs and expenses are payable from the SIPP The rent paid by the tenant is tax deductible as a business expense No CGT is payable on gains on the disposal of the property held in the SIPP There is no limit on the number of properties which can be purchased (provided borrowing limits are not exceeded) The rent received by the pension scheme helps to increase the retirement benefits.
Overseas Property
Under pre and post A Day rules it was, and is still permissible, to invest in overseas commercial property. However, some providers may not offer this facility due to complexity of administration such as overseas legal processes, overseeing letting agents and difficulty in finding specialist lenders who are able and willing to provide funds for purchase in various countries. Furthermore, many European countries such as France and Spain do not recognise UK trust laws. Because of this many providers simply do not offer this option.
Joint Ownership
Depending on what the pensions provider allows, planholders can join together in order to purchase an investment. In theory, there is no limit on the number of planholders who may do this. The SIPP provider may ask the planholder to sign a co-ownership agreement so that if a co-owner wishes to dispose of his share, or in the event of a co-owner’s death, the remaining partners have a right of first refusal at fair value. There is no requirement for joint owners to have equal shares; they can have unequal shares and borrowings so long as each co-owner individually respects the allowable borrowing limit.