Buy to Let Sipps - Sipps Pension Guide

Buy to Let Sipp Pensions

In the past Buy to Let Properties or portfolios of buy to let properties have been used be people as a form of pension but have never attracted the benefits and tax breaks that have been given to other traditional pensions.

From April 2006 however this all changes and for the first time owners of buy to let properties are able to place residential properties within a SIPPS pension scheme.

Under current legislation when buying a buy to let property you do not receive the full tax relief that you would receive if you were putting the money into say a personal pension plan. At the moment higher rate taxpayers in the UK receive 40% tax relief on their pension contributions.

This will now be applicable to buy to let properties that are held within a Sipps Pension. It will be possible to transfer existing buy to let properties to a SIPP Pension from 6th April 2006 this may be a worthwhile option for you depending on your current circumstances. You will also be able to obtain a mortgage on buy to let properties that are held within a SIPP.

The lending criteria for borrowing money on investment properties within a SIPPS Pension are tighter than normal buy to let mortgages. On current buy to let mortgages you are able to obtain up to 85% of the value of the property that you are purchasing providing that the income that you receive from the property is more than enough to cover the loan repayments.

When borrowing money to fund a buy to let property within a SIPP Pension you are only allowed to borrow up to 50% of the value of the property. The reasons for this are fairly obvious; the Government is keen for your Sipp Pension to be as risk free as possible without limiting its flexibility.

It will also be possible to purchase buy to let International properties with your Sipps Pension Scheme.