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Avoid the property investment rush, say advisors

31st August 2005 | back to article listings BACK    print this article PRINT

Pensions advisors have advised potential UK property investors that they need not wait until the April sixth launch date of the Self Invested Pension Plans (SIPPs) investment changes to take advantage of property transactions tax breaks.

As the first specialist pensions providers gear up to handle the anticipated wave of interest, Ian Rowe of Progress Financial Planning has told savers that they are able to make an off plan second home property investment in the current tax year with the sale completed in 2006 onwards.

This will enable savers to claim all the tax advantages of the scheme, including the government contribution of up to 40 per cent of the sale price, on purchases made through the autumn and ahead of the expected tide of transferred pensions wealth.

"We are expecting a huge influx of SIPPs in the UK pensions market in April and SIPP providers will be very busy keeping up with demand. For the client that has decided that a SIPP will be an appropriate avenue for their property purchase, it would be advisable to set it up prior to April to prevent any unnecessary delays in completion," said Mr Rowe.

"Many clients use the benefits of buying off plan to reduce the cost of their property purchase in Spain and therefore increase the profit on resale. Providing the property does not have a habitation licence or completion is extended beyond April next year it is possible to place the property in a SIPP now," he added.

In Spain, tax and property authorities anticipating increased interest in property investment have said that they are confident that SIPPs rules on UK tax free rental income and UK capital gains tax exemptions on sales profits will be compatible with Spanish law, although some local property and community taxes may still apply.

"Most traditional pension companies are very slow off the marks in releasing a property friendly SIPP, we have now launched the Assetz SIPP and it will allow anything that is legal under the new rules including UK residential, overseas property investments and holiday homes and even fine wine or art," said Stuart Law, Managing Director of Assetz.

"It is low cost relative to other flexible offerings and I would urge clients that want to invest in property to review our SIPP immediately and get their house in order before the mad rush in 2006," he added.

The SIPPs in Spain grouping of 50 Spanish banks, leading developers, surveyors and valuers are already offering 3,000 off plan properties in Costa Almeria, Costa Azahar and the more established holiday rentals areas of Costa Blanca. Over 500 buyers have registered to buy homes ahead of the SIPPs changes, the group has said.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/2128.html. Alternatively, please see our full press release archive.

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