Alliance Trust Savings, the financial services subsidiary of Alliance Trust, has published a webcast and downloadable bulletin for IFAs on how to invest in commercial property in a SIPP.
Alliance Trust pensions development manager Steve Latto says the information is particularly suited to those IFAs whose clients are professionals with work premises such as surgeries.
“For example, a dentist may put his surgery in a SIPP or a group of barristers might put their legal offices in their SIPPs,” he says.
“Obviously property valuations can fluctuate and this can be an illiquid investment, so advisers must look at the property being considered, who will occupy it and the likely rental income to be received by the SIPP.”
The bulletin and webcast explain how property is placed in a SIPP, when a mortgage is needed, and outline the key points to consider once a property is held in a pension.
Investing in commercial property in a SIPP can be attractive to clients because the investment is held in a tax-free environment where rental income is not taxable and there is no liability to capital gains tax when the property is sold, Latto says.
“These tax breaks and the opportunity for the pension to borrow to help fund a property purchase have to be balanced against other factors, such as the potential costs, which can be significant, and that holding a property may offer little liquidity,” he adds.
The webcast and bulletin may be viewed by registered advisers at www.alliancetrust.co.uk/adviser.
Based in Dundee, Alliance Trust Savings is one of the UK’s top ten SIPP providers by number of accounts with 53,000 customers.IFAonline
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