Revenue guidance given to one financial adviser suggests it might be possible to draw on a Sipp to invest in off-plan residential property BEFORE 6 April 2006 - but then again maybe not.
Conflicting reports from the Inland Revenue have compounded understanding of the manner in which Sipps may be used in the purchase of property in the run up to A-Day.
According to an IFAonline reader, if a client wishes to purchase an off-plan property after April 2006, but putt a deposit down immediately, it would be possible to use a Sipp to "invest" the deposit.
According to feedback given by the Inland Revenue in Nottingham to an IFA, it is possible to put down a deposit if an investment was in residential property, provided the property is not yet built.
Comments delivered by one Inland Revenue office said: “If the property isn't built, then it can't be residential.”
Similarly, off-plan property firm BuyProperty4Less, supports this view as the company has had it confirmed by several Sipp specialists, such Sipp investment is possible in residential property as long as the property is not yet ‘habitable’.
In contrast, however, a spokesperson from the Inland Revenue in London said it could not be seen to be giving advice regarding the tax position of property and Sipps, before adding investing in residential property will only be possible from 1 April 2006, when new rules come into force.
Standard Life - which launched a Self Invested Personal Pension on December 6, 2004 which wil allow investment in residential property from April 2006 - also supports this view.
According to Standard Life, separate consultation with the Revenue suggests it is not possible under current Inland Revenue rules on 'permitted investments' for SIPPs to invest in residential property.
Alistair Hardie, marketing product manager at Standard Life says: “Investing a deposit now to secure the off-plan property purchase next year would be an investment in residential property, which is not currently permitted.”
Hardie says that by this understanding, the company will not change its stance at this stage on plans to offer a Sipp.IFAonline
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