Commercial Property in a SIPP

SIPPs can directly hold Commercial Property including offices, retail premises, industrial premises and the land itself.

For example: Mrs Mulligan has a personal pension; she can borrow up to 50% of the value of the fund in order to purchase a commercial property. Her fund is worth £200,000, so she borrows an additional £100,000 to enable her to buy a commercial property worth £300,000. The property produces a yield of 7%, i.e. £21,000 per annum, and this rental payment is used to pay the interest on the mortgage and the repayment of the capital sum. When she comes to sell the property there will be no CGT and there will be no income tax on the rental payment. By the end of the 10 years the mortgage will be paid off.