Ruth Mitchell

Member Article

SIPP investments

With Watson Burton LLP Law FirmMost people will be aware of the government’s recent pension legislation, introduced in April, and commonly referred to as ‘A-Day’. Pension legislation already existed to allow individuals to invest in commercial property through a self-invested personal pension, but following this new legislation, individuals may now also invest in residential property. Investment in property using a SIPP has been considered attractive for a number of reasons:• The asset grows in a mainly tax free environment• All legal expenses are payable from the SIPP• No capital gains tax levied on any eventual sale• Contributions used to fund the purchase receive tax relief at the member’s highest chargeable rate• Rent paid by the tenant is received tax free by the pension scheme and enhances the individual’s retirement fund• The property is not an asset of the member in the event of bankruptcy.Of course there are pitfalls for the unwary investor:• If the investor chooses to sell his own house to the scheme to release cash, capital gains tax will be payable on this sale.• If the investor intends to live in the house, they must pay a full rent to the pension fund, or this will be seen as a benefit in kind and tax will be payable. • The experts warn that as so many people will be taking this opportunity to invest in holiday homes or buy-to-let properties abroad, they must be informed about local property laws abroad so as not to fall foul of regulations or be surprised by additional costs.Investment through a SIPP may well be an ideal way to invest, but anyone who is contemplating such a move must receive appropriate legal and financial advice in order to ensure that is the right investment according to the individual’s circumstances.Claire Waller is a member of the commercial property team at Watson Burton LLP. If you have any questions about this article or any other property matter, please contact her on 0191 244 4444 or at claire.waller@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .

Explore these topics

Enjoy the read? Get Bdaily delivered.

Sign up to receive our popular morning National email for free.

* Occasional offers & updates from selected Bdaily partners

Our Partners

Top Ten Most Read