Holding a commercial property within a SIPP
Discussion
I'm trying to get a better understanding of the pros and cons of holding a commercial property within a SIPP.
The property that I own is not related to my business and not held in a SIPP at present.
To transfer it I would need to do an in specie transfer.
I have a limited knowledge of the intricacies of holding commercial property in a SIPP, so please excuse any basic errors.
As I see it at present:
Pros;
The property is held outside of your estate for IHT purposes and ownership can be passed on to your nominated individual(s) on death by the SIPP administrators without difficulty or cost.
No income tax or CGT due on the rental income.
Cons;
You no longer own the property, the SIPP administrators do. But it's still your decision as to if and when it's sold. Plus the sale monies (less any loan amount and costs) stay in your SIPP.
You don't have easy access to, or control of the renal income, as it's paid into your SIPP and used to pay off any loan on the property.
What's the general consensus among the PH knowledgebase regarding commercial property and SIPPs?
The property that I own is not related to my business and not held in a SIPP at present.
To transfer it I would need to do an in specie transfer.
I have a limited knowledge of the intricacies of holding commercial property in a SIPP, so please excuse any basic errors.
As I see it at present:
Pros;
The property is held outside of your estate for IHT purposes and ownership can be passed on to your nominated individual(s) on death by the SIPP administrators without difficulty or cost.
No income tax or CGT due on the rental income.
Cons;
You no longer own the property, the SIPP administrators do. But it's still your decision as to if and when it's sold. Plus the sale monies (less any loan amount and costs) stay in your SIPP.
You don't have easy access to, or control of the renal income, as it's paid into your SIPP and used to pay off any loan on the property.
What's the general consensus among the PH knowledgebase regarding commercial property and SIPPs?
A few years ago I sold a property that I owned to my SIPP and sold it last year.
The fees getting it in to the SIPP, the ongoing fees, even if self managed, and then sale fees were considerable and far higher than a normal commercial transaction, the SIPP trustee property team and panel solicitors that they insist you use were very slow - took nine months to complete the sale which only held together because the tenant was buying it.
The ongoing fees were approximately £2k pa.
The tax advantages are clear but not sure I’d do it again.
The fees getting it in to the SIPP, the ongoing fees, even if self managed, and then sale fees were considerable and far higher than a normal commercial transaction, the SIPP trustee property team and panel solicitors that they insist you use were very slow - took nine months to complete the sale which only held together because the tenant was buying it.
The ongoing fees were approximately £2k pa.
The tax advantages are clear but not sure I’d do it again.
I think the property needs to be worth a few hundred thousand £ to make it worthwhile.
Mine isn't and it's costing me about £1400 + VAT per year just in admin fees to the SIPP provider. They've recently put this up by £250. Each time I want to change the rental fee I have to get a valuation from a Chartered Surveyor. In the past this has cost about £250 + VAT, I've recently been told I need a Red Book valuation costing £750 + VAT.
My SIPP can't reclaim the VAT.
If I want to move to a different SIPP provider it looks like an in specie transfer will cost around £4000 + VAT.
Mine isn't and it's costing me about £1400 + VAT per year just in admin fees to the SIPP provider. They've recently put this up by £250. Each time I want to change the rental fee I have to get a valuation from a Chartered Surveyor. In the past this has cost about £250 + VAT, I've recently been told I need a Red Book valuation costing £750 + VAT.
My SIPP can't reclaim the VAT.
If I want to move to a different SIPP provider it looks like an in specie transfer will cost around £4000 + VAT.
Thanks for the replies.
Does anyone know how in specie transfers work?
If the property is valued at £250,000, do you need to have at least £125,000 in your SIPP to transfer it?
Do you actually have to sell the property to the SIPP trustees?
I'm favouring keeping my property under my control at present, but that may change at some point in the future.
Does anyone know how in specie transfers work?
If the property is valued at £250,000, do you need to have at least £125,000 in your SIPP to transfer it?
Do you actually have to sell the property to the SIPP trustees?
I'm favouring keeping my property under my control at present, but that may change at some point in the future.
Gassing Station | Finance | Top of Page | What's New | My Stuff