Property Sipps have opened doors for investors to plough their money into residential and commercial property as part of their pension. Previously this would not have been possible, but in 2006 some legislation changes were brought about, and one of the biggest change was the introduction of SIPP.

SIPP which is the abbreviation of Self Invested Pension Plan gives the pension holder more control and power over where their money is invested. Traditionally, this sort of power was not enjoyed by pension holders and they were solely at the mercy of the fund manager, but now you can stipulate how much money you want putting in investment trusts, unit trusts, stocks, shares etc.

SIPPs have changed pensions in a big way and now 6 in every 10 people intend to use their pension funds to buy property whether its commercial property or residential property as a buy to let.

Buying any sort of property whether commercial or otherwise through a sipp can save you £1000’s of pounds in taxes, probably the biggest advantage would be the exemption from CGT (Capital Gains Tax) once the property is sold that you hold in your property sipp.

Normally when a property is bought through a property sipp, it is not owned by yourself but rather is owned by the trust and will be administered by the trustees, and income that is generated will be added back to the pension pool.

Another very attractive side to sipps is the fact that you can invest in international property as well. Given the current economic climate the UK is going through, for some people, it makes more sense to invest abroad than here in the UK, based on capital growth and also the weakened Sterling. There are many upcoming countries that provide a good return on invest (ROI) on far as real estate is concerned.

Another advantage of investing in a  property sipp is that there are many schemes on the market which actually give you a short term cash incentive without reducing the wealth of your pension. For example, say you had £20K in your pension, it may well be possible that you could get upto 25% cashback, completely tax free, deposited directly into your back account i.e. £5K without affecting or reducing your principal £20K.

Investing in a property as part of your pension in this manner can be attractive to many pensioner holders due to the cashback, since the extra cash can be used to buy a  car, pay for a holiday or pay off existing debt.