Would You Like to Pay Rent to Yourself?
Posted by siteadmin on Wednesday 19th of October 2016.
How to buy the property: If you’re a business owner, would you rather rent or own your business premises? This is often achievable using a commercial mortgage funded by your existing pension pot. Rent is paid directly to the personal pension fund of the business owner, and increases in property value are free from Capital Gains Tax (CGT).
What can happen if the business already owns its property: A sale and leaseback arrangement with your pension plan releases cash for expansion, and rent is a tax-deductible expense.
Primary restriction: Pensions can borrow up to 50% of the value of the pension fund at the time the property is purchased.
Popular solutions: (1) At least two directors or partners pool their pensions for co-ownership of the property. (2) Acquire the property in several stages/sections, particularly if your business already owns it.
The value of your pension can fall as well as rise, and you may not get back the original amount invested.
If you’d like a specialist adviser from Scottsdale MoneyWISE to conduct a feasibility study for you, please contact us.
The first stage of this study is to ascertain the value of all your pensions if they were consolidated into one plan – this is free of charge, with no obligation to progress.