You can use certain types of pension schemes to finance property purchases and asset investments through your pension. This allows you to grow your pension pot in alternative ways.
Using A SSAS Pension For Property Investment
- SSAS stands for Small Self Administered Scheme
- Used by company directors and key employees
- Lets you purchase commercial property like offices, warehouses, and land through the SSAS
- The purchased asset goes into your pension scheme
- Rental income is paid into the SSAS minus allowable expenses
- Tax free growth as no capital gains or income tax within a pension
Using A SIPP Pension For Property Purchase
- SIPP is a Self-Invested Personal Pension
- Purchase commercial property like offices and land
- Also used for residential buy-to-lets
- Purchase process takes longer than SSAS as asset first moved to trustee ownership
- SIPP trustees charge fees for purchase and ongoing management
Benefits Of Pension-Led Funding
- Tax efficiency – no tax on growth or income from assets
- Estate planning – assets pass outside of inheritance tax
- Better cash flows – tenants pay rent into your pension
- Wider investment choices beyond traditional pension assets
Risks To Consider
- Exit strategy needed to convert back to cash by retirement
- Early exit from assets could face tax penalties
- Property and land values can fall as well as rise
