Pension Pot Options
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Is commercial property hot for your pension pot?
In 2014 commercial property values rose by 19% (source: Investment Property Databank). Whilst property prices fluctuate, commercial property has historically been a relatively stable investment; research suggests that between 1981 and 2011 commercial property prices rose by an average of 9.1% per annum. Indeed many experts are forecasting a double digit increase for 2015 too.
One advantage of investing in commercial property over residential is that it can be purchased through a pension fund (such as a SIPP). Some small business owners choose to use their pension pots to purchase commercial property, then either trade from it themselves or rent it out to other businesses. The rental income generated by the property would be paid directly into the pension fund, rather than to the individual, thereby topping up the pension pot and at the same time deferring the tax point until the money is drawn down in retirement.
Of course investing in property is not everyone’s cup of tea, and there are potential downsides such as market volatility and property costs, so it’s recommended that advice is sought from a qualified professional advisor prior to proceeding.