Inserting property into a SIPP

[fridaypassion]

I'm looking at the moment at purchasing large industrial unit site with a view to splitting it up into several smaller units for rental. I understand the advantages of a SIPP but the investment will form part of our general income going forward so we would be looking to buy within an existing ltd. However it did occur to me that we could put one or more of the units into a SIPP when the works are complete. The site would end up with 5 units and we would be hoping to fully split the building in terms of business rates etc so all units are self contained. It would be a longer term aim as we would be buying with a mortgage initially and we would need to get that paid off before doing this. Is this kind of transfer possible or would it trigger potential CGT and/or stamp duty?

[Wombat3]

fridaypassion said:

I'm looking at the moment at purchasing large industrial unit site with a view to splitting it up into several smaller units for rental. I understand the advantages of a SIPP but the investment will form part of our general income going forward so we would be looking to buy within an existing ltd. However it did occur to me that we could put one or more of the units into a SIPP when the works are complete. The site would end up with 5 units and we would be hoping to fully split the building in terms of business rates etc so all units are self contained. It would be a longer term aim as we would be buying with a mortgage initially and we would need to get that paid off before doing this. Is this kind of transfer possible or would it trigger potential CGT and/or stamp duty?

Companies don't pay CGT, they pay corporation tax. I think you would have to transfer it at "fair market value" when it exits the Ltd company so depending on when that is it may or may not generate a profit subject to CT.

To put it into a SIPP does it not have to be bought from within the SIPP i.e. the SIPP has to have the funds to buy it from the Ltd company? It would follow then that such a transaction would attract all the same costs as selling it to Fred down the road.

Can the SIPP buy a part share in the thing to start with?

Edited by Wombat3 on Sunday 3rd April 13:34

[Babber101]

Your SIPP would need to pay fair market value for the unit so it’s best to transfer/sell it before works are complete as the value will be lower.

Sipps can borrow upto max 50% of the asset value so you would need 50% cash/equity in your SIPP to facilitate. Most mainstream Lenders will want a lease/rental income also although I have seen people use Wonga.com type lenders to get the asset secured and then refinance onto better terms

You can carry forward 3 years worth of unused pension contributions and make a lump sum transfer into the sipp

It will come down to the specific values as to what will be achievable

[fridaypassion]

Interesting points I think we have a bit of planning to do alongside purchasing. The possibility of the Sipp having shares is interesting. Or at some point we could make a separate investment and have a site or sites that are just within the SIPP. I know people that have sites within a SIPP and are way off retirement age but that at the moment wont work for us. I'm almost 43 so 55 seems a long way off!