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SIPP Property Purchase

Tax Breaks

Contributions to the SIPP receive tax relief where they are paid by the individual.

When you use the funds from your SIPP to buy a commercial property to be used as your own business premises, you will have to pay rent at commercial rates to the SIPP.

However, as usual, rent should be an allowable business expense, so it will reduce the tax you pay on any profits from your business.

Also, the rent you pay into your SIPP, less any loan repayments, will grow free of income tax and any capital gain realised by your SIPP will be free of capital gains tax. Please note that the value of your investment can fall as well as rise.

How much can I borrow?

If you wish to purchase a commercial property and have a SIPP then you can borrow up to 50% of the value of the fund in order to purchase one of the above types of property.

If your fund is worth £200,000 you can borrow an additional £100,000 to enable you to buy a commercial property worth £300,000. The money the property yields will then be used to pay the interest on the mortgage.