coin-gaucheFrench Leaseback: SIPP property purchasecoin-droit

 

WHAT IS A SIPP?

The self-invested personal pension (SIPP) is a flexible, highly tax-efficient personal pension comprising of investments you choose yourself.

Unlike a traditional Personal Pension which is tied to an insurance company that dictates where you can invest, makes charges which can be hard to justify and upon your retirement steers you towards an increasingly expensive annuity, a SIPP offers the freedom to choose and manage your own investments and hence your own pension fund.

sipp French leaseback investment

SIPPS AND FRENCH LEASEBACK

-Why should I incorporate a leaseback property into my SIPP?
It has been possible for some years now to put leasebacks into SIPPS, an option which has been very popular with investors seeking to profit from France’s position as the most popular tourist destination in the world by purchasing property here. Buying a leaseback property and placing it in a SIPP allows an investor to profit not only from the substantial tax advantages proffered by this type of pension but also the tax incentives offered by the French government to encourage the purchasing of property for tourism purposes under the leaseback scheme.

> The tax advantages of SIPPs
Each payment you make into your SIPP is boosted by basic rate tax relief from the government with those paying higher rate taxes able to claim as much as 40 % tax relief.
In real terms this means that you pay less for your property, for example a high rate tax payer wishing to invest £100,000 would only pay £60,000.

Any income generated by your SIPP is tax-free meaning that any rental income you earn through your leaseback is also tax-free.

From April 2015, UK savers will be able to access the entirety of their SIPP pension at any time after age 55, subject to income tax at marginal rates on three-quarters of the money. The ability to take the whole pension as one lump of income would mean someone with a £100,000 pension could take £25,000 tax-free and then withdraw the remaining £75,000 to spend or invest as they saw fit. This means that he could take out his French leaseback in order to either sell it or take a lower rental income and use it a few weeks per year by signing an amendment to the leaseback contract.

Buying through a SIPP will also allow investors to use their pot knowing they will be able to use their French leaseback property in the next few years when they reach 55 years old.

> Tax incentives to those purchasing leaseback properties in France
Tax incentives for buying leaseback properties include:

- A 20% VAT rebate on the price of the property, paid to the property owner upon completion
- Capital gains tax decreasing from year 5 to 30
- Minimal tax on any rental income in France (0% the first 23 years)
- Guaranteed Net rental income between 3 to 6% of the property price

PURCHASING OPTIONS
For those wishing to purchase a leaseback property to put into their SIPP there are different options available to suit every budget.

  1/ Buy now, SIPP later:
  Purchase the property in your own name and transfer the property into your SIPP at a later date (tax relief payable upon transfer).

  2/ Classic:
  Purchase the entire property using funds from your SIPP.

  3/ Joint purchase:
  Purchase part of the property using funds from your SIPP and part in your own name (which can be financed by a personal loan).

  4/ SIPP and mortgage:
  Purchase the property using your SIPP and take out a French mortgage on the rest with mortgage repayments normally being covered by the rental income. As much as 50% of the net value of a SIPP can be borrowed to increase the funds for your property investment. For example, a fund that has a value of £150,000 can be increased by 50% or £75,000 to make a total fund of £225,000 available to invest in property.

NB With options three and four you will only benefit from proportional tax benefits according to what percentage of your leaseback is in your SIPP

WHAT HAPPENS TO MY LEASEBACK PROPERTY THEN?

Once you have purchased your leaseback property from the developer you sign a lease contract with a management company who will take care of your property for you.

By investing in a French Leaseback property you will benefit from:
• The peace of mind brought by guaranteed rental income for the duration of the lease
• No management or maintenance hassles
• No running or insurance costs
• A secure rental income which can be used to meet any mortgage repayments

Always look at the quality of the management company when choosing your leaseback to ensure you will receive a secure income from it.

THE BUYING PROCESS

1. Identify and reserve a leaseback property with a deposit
2. Set up your SIPP and arrange finance
3. Complete paperwork for the transfer

Here are some French Leaseback that you can incorporate in your UK SIPP:

 

Village nature: a partnership between Center Parcs and Disneyland Paris

Price: 

€274,498

 

2
77-Seine-et-Marne
Villages Nature, an upscale property investment and a joint venture between Euro Disney and PV Center Parcs, secure and profitable. Holiday Residences and leisure facilities available for individual and corporate investors.

View details...

 

Flaine- 3 bed leaseback in residence with pool and spa, direct access to the slopes

Price: 

€446,070

 

3
74-Haute-Savoie
The prestigious Terrasses d Helios residence offers stylish 1 to 3 bed apartments in traditional chalets, and comes with a pool and spa, with direct access to the slopes and Grand Massi ski area.

View details...

 

Contact us today on 020 7428 4910 under no obligation for more information on SIPPs and the latest French leaseback properties