UK - Property investments through self-invested per-sonal pensions will fall dramatically when new tax changes take effect in 2006, Alexander Forbes Financial Services warns.
SIPP holders are currently able to borrow up to three-quarters of a commercial property’s value to fund their investment.
However, after A-Day – April 2006 – they will only be able to borrow up to half of the value of their fund for both commercial and residential property.
AFFS says this means that an investor with a SIPP fund of £100,000 can currently borrow £300,000 to buy a £400,000 commercial property, but after A-Day the limit will be £50,000.
AFFS marketing director David Marlow said: “People think the change in borrowing figures from three-quarters to half sounds pretty innocuous, but the impact is more far-reaching when you consider that they are comparing apples and pears.
“Many people are getting very excited about the opportunity to buy residential property with their pension funds, but the government has slipped new lending rules under the radar which will scupper many investors’ plans.”
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