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Half price property with a Sipp

30th September 2005 | back to article listings BACK    print this article PRINT

Property investment experts, mortgage brokers and pensions advisors may have all underestimated the size of the Sipps tax give away, believes Abbey National. Previously, the figure of 40 per cent had been widely accepted as the amount of a property investment price that Sipps investors will be able to reclaim from the tax man.

Now however, Abbey national says that the figure is actually a slim majority of the property price – 51 per cent. The reason for the miscalculation is that Revenue and Customs grosses up the size of the pensions contribution before doing the pensions calculation, explains James Baker, a director at Abbey National, to In2perspective.

"It's extremely generous," he said, adding that there would be an even greater incentive for the over 50s, who will be able be able to take a cash lump sum from their pension funds for property investment purposes.

Mr Baker gives the example of a higher rate taxpayer buying a £100,000 property with a Sipps property investment. The buyer would receive a £23,000 refund personally and a further £28,000 paid back directly into the Sipp fund – meaning that most of the property price, £51,000 would be returned to them.

Analysts say that the upwards adjustment is likely to stoke even further the anticipation around Sipps, with leading estate agents Savills predicting that the flood of property investment is likely to be anything up to six billion pounds. Standard Life, not a company known for aggressive marketing campaigns, has been astonished by the one billion pound inflow it has already received into its nine month old Sipps based offering.

"It has become the hottest topic of conversation at middleclass dinner parties," Paul Bradshaw, of the Abbey Bank, told This is Money "We are expecting that almost everybody with a City bonus next year will be pouring £215,000 into a Sipp."

Assetz has recently launched the first overseas property investment usable Sipp's, unusual in that it is compatible with any foreign country where the Sipps tax breaks are recognised.

"Despite all the furore about buying property abroad within pensions after A-day next year, there are currently very few pension providers confirming that overseas property will be permitted in their SIPP," said Assetz director Stuart Law.

"We have scoured the country for advisers to ensure the Assetz SIPP offers the opportunity to invest hassle-free in all types of property in the UK and overseas, bringing together all the expert advice and professional services required."


This is a press release by Assetz also available at http://press.assetz.co.uk/articles/2236.html. Alternatively, please see our full press release archive.

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