Pensions and property purchase – these are the two most important and biggest investments that you’re likely to make across your lifetime. The challenge surfaces when you want to plan how to combine the two. Making investments in a property by using your pension fund is a big decision that’s best taken with the help of financial experts. You certainly wouldn’t want to go wrong at the stage of your life when you may be dependent on your retirement funds and pensions, right?
As per experts in the field of financial planning, if you are okay in investing in property by using your pensions, you may want to do so through a Self-Invested Personal Pension (SIPP). Read on to know how to go about the act in the easiest ways.
What is a SIPP?
Self-Invested Personal Pension or SIPP is a kind of pension cover wherein you are allowed to make investments in different types of asset classes. You can buy the property and other assets while enjoying the various tax benefits attributed to your pension amount. According to David Brunning IFA from Henson Crisp, the best way to successfully use pension funds to buy a property is to work with an experienced specialist. They are also the best people to go to when you’re finding it difficult to chalk the way forward with your SIPP investments in property.
Where to Put your Pension Savings?
Unit trusts, investment trusts, and government securities are just a few of the many areas where you can think of putting your SIPP savings in. You may also apply your pension money for the purchase of insurance company funds, property, and individual shares and stocks.
SIPP and Property Buy
According to experts who are adept in handling pension funds and other financial matters, the rules pertaining to property and SIPP are pretty stringent in the UK. For instance, as the pension holder, you’ll not be permitted to purchase individual residential properties, which you can hold to your name, within your pension. In case you’re planning to buy a property that’s deemed as ‘residential’ by HMRC, then you may end up paying a minimum of 55% of the investment as taxes.
How to Invest in Residential Property?
When you discuss your concerns with financial advisors connected with leading companies, you’ll get to know that you can still invest in residential property but via different routes. You may go through the channel of a Real Estate Investment Trust (REIT) or a residential property fund to get what you need. Residential property funds function in the same manner as open-ended funds. Reliable finance management companies can help you make direct investments in houses; in addition, they may help you get in touch with companies that make property-related investments for further dealings.
Way Forward
Along with residential property, you may think about placing your fund in commercial properties with the help of experts in the business. They’ll understand your investment needs and help you make the best choice to promise a lucrative ROI. Get in touch with your preferred financial planning and management company, right away.
