Using a SIPP to Purchase a Commercial Property With a Business Partner?

Q. My business partner and I are looking to buyThe term of the loan may not be any longer than
new commercial premises. I want to buy my5 years, although a loan can be rolled over once,
share using my SIPP but my partner does notsubject to there being sufficient security i.e. first
have one. Is it possible for a SIPP to purchase acharge over assets which have greater than or
property with a non-SIPP co-owner?equal value to the loan amount. Interest must be
A. Yes, it is possible for you to purchase yourcharged at a minimum of 1% above base rate
property using your SIPP with a non-SIPProunded up to the nearest 0.25%. The loan must
co-owner. It makes no difference at all. The onlybe repaid over the term. The repayments must
difference being that your partner will own hisinclude capital as well as interest.
half, where as your SIPP will own your half of theThere are many benefits from using your SIPP to
property. You will also have to pay rent into yourpurchase commercial property as an investment
SIPP every month.It is possible for the trusteestool. For example, you will receive a rental income
of your SIPP to borrow money from ainto your SIPP, long term capital appreciation,
commercial lender in order to assist with thelower volatility than equities and borrowing is
purchase of suitable property. HMRC guidelinesavailable to assist your purchase (up to 50% of
state that the Trustees can borrow up to 50%your fund).
of the net asset value of the SIPP, as calculatedAlso there is the ability to buy the property for
immediately before the borrowing takes place.your business without being a capital expense and
This limit includes all existing borrowing. The rentwhen you come to sell the property, it will be
receiveable by the tennants of the property mustfree of Capital Gains Tax. The question I want to
exceed the loan repayment and the interest dueask is - Why hasn't your business partner got a
on the loan.SIPP?!