Commercial property can of course benefit not only from appreciation but also from the rent yielded from its tenants. There are generally no restrictions on who can be a tenant, as long as an open market rent is agreed and it is paid to the SIPP.

The biggest advantages come from the tenants purchasing the property in their own SIPPs. There are some significant tax advantages for both parties – your adviser can give you full details – however in brief:

• the funds used to purchase the property should have received tax relief 
• rent from the property is free of income tax
• appreciation of the property value is free of capital gains tax
• rent payable by the tenants can be treated as a business expense for tax purposes

It is important to remember some of the downsides of property investment in SIPPs. It is potentially a very illiquid investment and may take time to realise. This could pose a difficult problem, particularly if close to when you wish to crystallise your SIPP (i.e. take benefits).