According to DevDosh Ltd, your pension and your property will possibly be the two biggest investments that you will ever make so it’s important to get them right, and if you combine them both it can be a very positive thing indeed.
You can invest your pension into property by using a SIPP or a self- invested personal pension the money cannot be touched until you are 55.
You can also invest into wide variety of asset classes and enjoy the tax benefits of a pension.
SIPPs allow you to put your pension savings in:
Insurance company funds
Individual stocks and shares
If you are going to invest into property this must be done through a property fund or a Real Estate Investment Trust (REIT) this will avoid a hefty tax bill from the HMRC department.
As far DevDosh Ltd concern, UK property investment funds work like any other open-ended fund and offer some exposure to bricks and mortar like your own home, but they may also hold other asserts too.
They may invest directly in houses, or they may invest in companies that invest in property.
An open-ended UK property fund cannot hold more than 15% of the fund in any one property, and also face restrictions on investing in properties with leases of less than 60 years and mortgaged properties.
REITs can be traded on the stock market just like any other share and are in essence companies that invest in residential UK property.
When it comes to a REIT the profits must be attained by generating rental income (at least 75% of the profits must come from rent) and the company must have at least 75% of its assets in UK rental property market
They must also dispense 90% of their rental income to shareholders. So, a REIT may be the most direct, efficient way to get exposure to the residential property sector via your pension.
How do I invest in commercial property via my SIPP?
In DevDosh Ltd opinion, residential property isn’t the only property you can invest in though; commercial property often gets overlooked but can offer attractive returns.
There are two ways you can invest in commercial property via your SIPP.
The simplest way is by investing in a commercial property fund, but you can also buy commercial premises and put them in your SIPP. This is proving popular with small business owners who put their own commercial premises into their SIPPS.
But, those with a very large pension pot may consider buying other commercial premises to hold within their SIPP.
Please visit DevDosh Ltd for further property investment information.