Benefit from tax free rental income and capital growth by acquiring commercial property in a pension
The great thing about investing in property with a pension is the two forms of income – Capital Value and Rental Income are tax-free
There are two types of pension scheme that allow you to buy property. A Self Invested Personal Pension (SIPP) or a Small Self-Administered Scheme (SSAS) can purchase commercial property as well as commercial and agricultural land. Once purchased, the property or land can be let to your company or a third party. This gives rise to tax-free rental income and capital growth, with rental income paid into the pension scheme bank account.
Rather than making new contributions to a pension many of our clients transfer old employer pensions (final salary and money purchase) into SIPP or SSAS pensions that allow them to invest in property. This is a simple process however it is important to have an investment plan so that you can decide on the right SIPP or SSAS scheme provider for you. If you are transferring a pension you also need to consider any benefits that you are losing.
How you can buy property using your pension
Find a Pension
Establish a pension that allows you to invest in a property
Identify a suitable property for your business or investment
Buying a property within a pension is very similar to a personal purchase
Benefit from tax-free rental income within your pension
The different kinds of commercial property
Commercial property, when purchased using a pension, has a broad meaning and includes land for development, high street premises, factories, car parks, hotels or pubs. We are often asked if it is possible to invest in residential property with a pension. Whilst a SIPP or SSAS should not invest in residential property, there are some exceptions. Care homes, hotels and designated student Halls of Residence are not treated as residential property.
There are also some job-related properties that are exempted, such as a pub with a landlord’s flat. The conditions for this type of investment are extremely strict though and require a number of criteria to be met in order to ensure that they are not inadvertently classed as residential property. For example, a shop with some flats above it, with their own entrance would not qualify but land for residential development is possible. Assuming that the proper planning permission is obtained, land can be developed, even into residential property, however, it must be sold from the pension before it becomes substantially operational if it is residential.
HMRC imposes high penalties even for genuine mistakes and we can help you avoid them.
This is a technical investment and we have the experience to help ensure that the SIPP and SSAS property investment rules are not broken.
A SIPP or SSAS pension can also borrow 50% of its value to help with the purchase of property. A SIPP loan or SSAS loan can be from a bank or any third party investor. A SIPP or SSAS can also combine its value with other family members to create a larger potential purchase price. We often help a husband and wife combine their pensions, it is also possible to pool the pensions but to keep the benefits separate. We are able to offer the best property SSAS pension advice, tools and knowledge to support your strategy.
Pensions less than £100,000? We can still help.
If the total pension value is less than £100,000 then there may not be enough to make a direct commercial investment however this should not stop you from using property as the investment to grow your pension. Our investment page has a comparison chart detailing some of the leading Property Bonds and also property crowdfunding investments. Investments like these can be used in a 2 step process to acquire your own commercial property or land.
For example, a 5-year investment in a Property Bond could return 60% growth, creating a much larger pension fund substantial enough to acquire a property investment. This is a strategy many of our clients use.
We have helped many people to turn their old, poorly performing pensions into a valuable pension by investing it in property.
What our customers say...
I cannot recommend Lewis Jones from the Landlord’s Pension highly enough. His professionalism and knowledge of SSAS’s has been outstanding. He has guided me through the end to end process of setting up a SSAS to transfer my Pension into and has never complained when I’ve sent numerous emails with... Read moreLissa Lowrie10/11/20
Highly recommend The Landlord's Pension for opening a SSAS. They are highly professional yet friendly and personable. They are really helpful and keep you informed every step of the way. It's refreshing to pay for a service by a company who actually do what they say they are going... Read moreVicki Prosser29/01/20
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Are you interested in investing your pension in business or property? Do you have questions about how you can do this? If so book your FREE, 15 minute, no obligation investment consultation. One of our experienced advisors will call you at a time that is convenient for you.