Commercial Property Syndicates via a pension
A syndicate will be formed to establish a property fund into which individual syndicate members will contribute. They do this by transferring part or all of their existing pension funds into a Self Invested Personal Pension (SIPP).
Their money will be pooled with other members to invest into the property fund. Their share of the property fund will be identified and valued on a pro rata basis.
The property fund will make the proposed purchase with additional funds by means of a mortgage, if appropriate to that syndicate. Member’s wishing to receive pension income will invest without any mortgage, whereas member’s not requiring income can increase their percentage holding of the property by borrowing an additional 50% of the amount invested. Their proportion of the rental income is used to pay their proportion of the mortgage.
One of the main attractions of owning a commercial property within a SIPP, other than its investment returns, is that rental income and Capital Gains Tax are currently free of tax.
Syndicate member’s can sell their holdings, which will be offered to the existing member’s first.