Buying property with your pension

A key benefit of Independent Trustee Company Limited (ITC) self-administered pension arrangements is the member’s ability to identify and acquire specific property investments.  Provided pension rules are satisfied, the member can use their own market knowledge and contacts to access unique opportunities and potentially enhance their retirement assets.

Advantages of purchasing property through a pension

Many pension investors have funds available either in their pension or in their company that could be contributed to their pension scheme. With interest rates being so low, the returns that these funds are generating are minimal. In contrast, according to property website, the average rental rates in Ireland have increased by 9 per cent in the last year alone [Source: Daft Report, May 2014].

The flexibility of a self-administered pension arrangement means that, provided pension rules are satisfied, the pension investor can choose the property they wish to purchase. Both residential and commercial property can be acquired.

Where a property is acquired through a pension vehicle, the rental income is not subject to income tax nor will Capital Gains Tax be payable on the sale of the property.

Borrowing can be utilised if available and the property fund can even be registered for VAT if required.

On retirement, the property can be transferred in specie to an Approved Retirement Fund (ARF) and can continue to generate a post retirement income.  Indeed, the value in the property ultimately form part of the ARF holder’s estate on death which means that the value in the property (as opposed to the property) can be passed on to the ARF holder’s family.  

Why self-administered?

The acquisition of property through a pension is just one of the benefits that attract investors and savers alike to self-admin schemes. Other benefits include that fact that income tax relief on employee - contributions remain at the higher rate of tax;  the employer can get full tax relief on qualifying contributions;   All income and gains within pension schemes remain exempt from income tax and capital gains tax; On retirement, an individual may take 25 per cent of the value of the pension fund as a lump sum, of which €200,000 is tax free; The individual has control over every aspect of their pension affairs including all investment and contribution decisions; The individual has access to a broad range of investment types in a transparent, flexible, secure, cost efficient environment.

Why ITC?

With a view to making property purchases easier ITC has developed a series of arrangements and procedures, known as Propertyline, to ensure the process is as smooth and as straightforward as possible.

For more information on any of the above points please contact ITC on 01 6611022.

*Please note this content is the view of the author and not of Independent Trustee Company