Hi P. Your OP was pretty simple to explain, as you were talking about a standard pension, ie, investing in UTs etc via a platform, where all the issues discussed apply to.

When holding Commercial Property, the situation about taking cash out of the pot can be much more complicated as you are not dealing with a providers ability to have segments etc, but with a tangible asset held, effectively, under a trust arrangement. If you have a property in a SIPP, and you wish to take cash out, in MOST cases, this would probably necessitate the sale of said property. (Unless there were liquid assets in the pension fund alongside the property, equal to 25% of the total fund value). So, regarding rental income from a crystallised property being available as another slug of TFC, the scenario cant actually occur because it would have been sold to pay the original TFC.

Crystallisation is Revenue speak, and still gets caught in most spell checkers!

It is straight forward in theory P. Any properties held in the SIPP that were not needed to be touched to release TFC would remain uncrystallised, with valuations/rental income being deemed to be in a pre crystallised state, ie, TFC would still be available from them.

In practice, it is pretty rare to see more than one or two properties in a "normal" clients SIPP though, and even syndicate SIPPS usually pool their funds for one property purchase. This is exactly why liquidity within a property SIPP is important, not just for fees etc, but to minimise the risk of a forced sale of a property to meet TFC obligations and/or death benefits. Same as any asset class I suppose.

R

I take the point about a property SIPP needing adequate liquidity in the event of needing to pay out for whatever reason. I was thinking of the position in a SIPP also holding sufficient cash so not needing to sell the property.

To paraphase something similar to my case:

Company premises value £500,000, in the process of being transferred to SIPP by maximum annual employer contributions.

To date, £300,000-worth transferred
I also have £100,000 in ordinary investments in the SIPP .
Therefore total SIPP value £400,000.

I take 25% of the SIPP in cash, ie £100,000. I do not need to sell the property to do that.
I am 63, will work for a further 5 years, continuing to make employer contributions until the whole building has been transferred. Therefore part of the sipp is now crystallised, but the uncrystallied part will grow over the next 5 years, from a) contributions b) rent c) growth in any of the other small but increasing investments d) property revaluation.

How is this growth apportioned between the crystallised and uncrystallised parts?

Can liquid and illiquid assets be exchanged or purchased/sold as between crystallised and uncrystallised SIPPs, so as to facilitate a further 25% drawing from the uncrystallised portion?

Good grief! I hope you are being well advised during this process!

What you are doing is perfectly legal, just a bit complicated, so I will leave issues such as tax/stamp/cgt aside.

If your SIPP is currently worth £400k, and you take £100k tfc, then the entire SIPP would crystallised at that point. Lets assume 1.1.13 is the transaction date. Any growth/rent generated by that portion of the SIPP will not be available as a second tranch of tfc.

Contributions paid in, and the remaining transfer of the property after 1.1.13 will be uncrystallised, and tfc will be available from that pot. The obvious problem is how your SIPP apportions rental and capital growth of the property between the two elements correctly.

Off for a lie down.

I think the likelihood of upcoming development in a finance and its accidentally obtained stumbling blocks problems me stiff! It creates me think the only reason to do is get the lot out while you can! And as my pseudonym indicates, this has to be in the passions of the Condition who will gather the lion's discuss if you fall deceased by clinging on to it a lengthy time, through large and unjust taxes of second-hand and ability in financial commitment skills.