Instructing Pension to buy a house as an investment
Discussion
Hello folks.
One of my pensions (no longer paid into) has a value of around 75k.
This can provide around 1100 a year, or maybe 2k a year drawdown for a fair while.
i have been thinking that using it to buy a flat for renting and the profits going back into the pot would be a better way as i would then be left with a flat (I think)
Anyone done this before ? any advice ?
I could probably even provide my own tenant and provide the "service company" to manage the flat as well, maybe saving more money and tax .
Feasable ?
One of my pensions (no longer paid into) has a value of around 75k.
This can provide around 1100 a year, or maybe 2k a year drawdown for a fair while.
i have been thinking that using it to buy a flat for renting and the profits going back into the pot would be a better way as i would then be left with a flat (I think)
Anyone done this before ? any advice ?
I could probably even provide my own tenant and provide the "service company" to manage the flat as well, maybe saving more money and tax .
Feasable ?
Not remotely feasible. Residential property is not allowed as a pension investment.
Commercial property (and land with, or about to get, residential property) is though. Most cities allow commercial property to be converted to residential these days, so this might be an option.
Your SIPP has to sell it as soon as it become residential though. You keep the profit, just in your SIPP account, rather than your bank account (and therefore tax free rather than taxable).
Commercial property (and land with, or about to get, residential property) is though. Most cities allow commercial property to be converted to residential these days, so this might be an option.
Your SIPP has to sell it as soon as it become residential though. You keep the profit, just in your SIPP account, rather than your bank account (and therefore tax free rather than taxable).
Brads67 said:
So a commercially used flat for renting out is still classed as residential for my purposes . Even if it`s owned by a company ?
I am not quite sure what a commercially used flat is?!A flat is residential property and like all residential property cannot be held within a SIPP.
Brads67 said:
Was thinking that as it`s being used and run by a company albeit to rent to private individuals it may be a commercial property, but maybe not.
Brothel sounds like a clever idea though.
As long as the nosey handyman keeps schtum.
It is nothing to do with what the property is actually being used for or the structure of the ownership, it is the designated status of the property that counts. If this designated status is residential then you can't hold it in a pension unfortunately.Brothel sounds like a clever idea though.
As long as the nosey handyman keeps schtum.
JulianPH said:
It is nothing to do with what the property is actually being used for or the structure of the ownership, it is the designated status of the property that counts. If this designated status is residential then you can't hold it in a pension unfortunately.
If the flat were to be used for, say, a dental surgery - would that require change-of-use which would bring it outside "residential"?TBH. I'd have thought dentists would have owned their own surgery, but it may open some options.
TooMany2cvs said:
JulianPH said:
It is nothing to do with what the property is actually being used for or the structure of the ownership, it is the designated status of the property that counts. If this designated status is residential then you can't hold it in a pension unfortunately.
If the flat were to be used for, say, a dental surgery - would that require change-of-use which would bring it outside "residential"?TBH. I'd have thought dentists would have owned their own surgery, but it may open some options.
There is simply no point in doing this when you can often find commercial property available cheaper than residential property (and you would have to buy the flat personally and sell it to your SIPP only if you are successful with your planning application).
Doing it the other way rounds makes more sense (buying a commercial property with your SIPP, converting it into residential units and your SIPP selling this with no CGT).
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