Holiday Home Sipps - Sipps Pension Guide

Holiday Homes Sipp Pensions

From April 6th 2006 it will be possible to purchase a holiday home within your SIPP Pension Fund. (Self-Investment Pension Plan).

If you believe everything that you read there are simply hordes of UK Residents who would like to own a property in the sun but until now they have been unable to do so in a tax efficient way or as part of a formal Pension Plan.

Some tax experts are arguing that if you do elect to buy a holiday home with your SIPPS Pension you having to pay taxes in the country where the property is located will offset any tax advantages that this may give.

Using your pension money to realize a dream however has its advantages, the main one being that you and your family are free to stay in the property whenever you wish. The rules stipulate that you have to pay the Pension Fund the market rate for the duration of your stay but thats not exactly too onerous.

Buying a Villa or apartment in Spain or anywhere in the world, with your SIPPs Pension means that you will receive full tax relief from the UK Government. In essence on a 100,000 purchase a higher rate taxpayer would only pay 60,000 whilst the Government making up the rest.

Contributions to a SIPP pension have a ceiling of 215,000 and any income that you receive from the property is tax free, (UK Tax Free), and free of any UK Capital gains taxes. The income does of course have to go into the SIPP but you can obviously use this money to pay off any borrowings.

It is also possible to raise mortgages with your SIPP Pension top buy overseas property. The UK Government are keen to prevent people from over committing themselves and have capped the maximum borrowing for a SIPP Pension to 50% of the value of the Pension Fund. Before diving in feet first it is best to be thorough in your research as many countries will have a problem with a SIPP Pension Trust buying a property and may insist that you set up a company to do so.

Property in Herault an area in South-western France looks like one region set for an influx of Sipps pension money: "The prices are not too high, the weather is great and there are five airports to fly into from the UK" said Simon Kerridge of Languedoc Property Finders, a large property search website that gives advice on property in Pezenas and other wonderful market towns and villages in the Languedoc Roussoullion.