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Hi, I'm just about to have a commercial freehold property ( which is tenanted )transferred to my sole name from other family members. My question was can i have the rental income £6000 PA invested/ structured into a SIPP Pension. I'm nearly creeping on the higher tax rate bracket so this property rental going into some sort of pension would be great & if so can other future commercial property rental go into the same pension scheme? Many Thanks.
Possibly you can
You can definitely put in £3600 per year without an income from a Job
If you have Employed income or Self employed income you can put in 100% of your salary or 40k a year max
It all depends what you do for a living but £3600 is not a problem
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Yes. There is tax relief at the higher of £3600 or 100% of you earnings (ie not property income), capped at £40k (unless income very high)
However depending on your existing pension pot you may be better transferring the entire property into a pension scheme.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
I wasn't aware you could transfer property into a pension. How does this work? Surely if property is valued above £40k this would come above the annual allowance?
The scheme buys it!
But no hint of residential property or its an unauthorised withdrawal with a big tax consequence. Commercial property only.
Do you already have a SIPP? Or other pension scheme you can transfer into a SIPP?
I use AJ Bell, I have two commercial property into my SIPP and I am looking for the third one (£ 450K asset, the two commercial property, and a Bank willing to lend my SIPP £ 220K ag the two property - hence I am a sort of cash buyer on the third one).
Combined rent of the two property at the moment is £ 33K per year, with the third one aiming at around £ 50K that would go tax free into the SIPP pot
For me it has worked very very well...started in 2014 with first purchase, second one in 2016, and between cash flow (tax free) into the SIPP and capital appreciation, I double my initial pot that was circa £ 225K in 2014 when I started!
Need to be mindful of the lifetime allowance, not likely to be a problem in the short term.
Good point, actually I have not contributed into the SIPP since 2013, it has been self-funded through the rent received by the two properties the SIPP own.
I have not investigated further, but I read somewhere that I can gift some of my SIPP cash to my wife SIPP, and also to my children SIPP. That could be the way if/when I reach the £ 1 Mio threshold etc etc
I am not aware of the gifting option, I know it can be passed IHT free but don't know about gifting in lifetime. The rules are complicated and need advice from a specialist on SIPPs and IHT.
This is a possibility but you will need detailed assessment of your situation. There other options. Pm me if interested.