Purchasing a Property with your Pension Fund
There has never been a better time to purchase a property through your pension.
Property prices are rising and there is a strong rental demand especially for residential property in Dublin and surrounding areas.
If you have pension assets built up, it could be a good time to consider using some of your assets to purchase a property. From a tax point of view this makes total sense as the rental income and the capital appreciation of the property are both tax free. All contributions into a pension fund are a tax write off.
If you are a Company Director, or an employee and you have pension assets and you are interested in this type of financial vehicle then call us at 01 8700370.
Ireland's Only Lending Facility for Self Administered Pension Funds
Buy a residential or commercial property for your pension fund?
Use your Pension Fund to provide 50% of the cost of the property and borrow the other 50% at a great rate
Contact Colm @ Cregan Kelly O'Brien to learn more
Cregan Kelly O'Brien have partnered with ICS/DILOSK to provide Ireland's only lending facility to self administered pension funds.
10 Reasons why now is a good time to buy an Investment property through your pension
- You decide on the property that you wish to purchase and use your own contacts and knowledge; to help obtain a suitable property, as you are not borrowing to purchase a property, you are considered a cash buyer and you should be able to complete the purchase of the property far quicker, also hopefully at a lower price than someone who is looking to get mortgage approval.
- Both residential and commercial property can be acquired;
- Property prices are still far below the levels they were in the boom;
- There is strong rental demand on residential properties and the commercial property market is picking up;
- There is no tax payable in respect of the rental income received from the property and this is paid tax free into your pension fund;
- There is no capital gains tax if you sell the property in the future, you can if you wish hold onto the property after you retire and draw down your 25% from other pensions assets that you hold;
- Payments you make into a pension fund still receive tax relief at the higher tax rate;
- Any expenses incurred re the purchase of the property e.g. solicitor’s costs, auctioneers fees, stamp duty along with expenses in carrying out a refurbishment or fitting out of the property can be paid directly out of the pension fund. Also the cost of water charges and property tax can also be paid directly by your pension fund;
- Two people can pool their pension assets together to purchase a property e.g.: 2 Directors;
- At retirement 25% of the total value of your pension assets can be taken as a tax free lump sum subject to the max of €200,000.
Setting up an Small Self Administered Pension and Buying a Property
Pre-RequisitesYou need existing pension funds, a lump sum or mortgage approval from a financial institution. Cregan Kelly O'Brien can assist in pension fund transfers, or obtaining mortgage approval.
Revenue ApprovalCregan Kelly O'Brien will arrange and collate all the documentation required to submit to the Revenue for approval - which typically takes 5-6 weeks.
Identify PropertyIdentify the investment property, this can be a residential or commercial property, and can be in Ireland or the UK (other countries require revenue approval)
Purchase the PropertyThe property is purchased on behalf of the SSAP. All transaction related fees/duties are paid from the fund account.
Rental IncomeAll Rental lncome must be lodged into the fund account, and is tax free.
Setup SSAPA special purpose vehicle (in effect a pension trust) must be set up to own and run the property. Cregan Kelly O'Brien can organise the setup of the SSAP and appointment of the trustees.
Transfer FundsTransfer existing pension funds or lump sum into SSAP. Cregan Kelly O'Brien can ensure you get maximum value from your existing pension funds.
Instruct a SolicitorIt's entirely up to you to appoint whichever solicitor you wish for the purchase of the property. Solicitors fees and stamp duty can be paid for by the SSAP.
Pensioneer TrusteeThe Pensioneer trustee acts as overseer for the transaction, and ongoing income/expenses.
Expenses are written downSolicitors costs, auctioneers fees, stamp duty, property management costs, refurbishment/cleaning costs, water charges, and property taxes are paid by the SSAP
Fund Performance Illustration
|Year||Property Value||Rental Income||Investment Income||Fund Expenses||Fund Value||Rate of Return||Increase in Fund|
Increase in property value based on 5% per annum
Rental based on 5% of property value per annum
Fund expenses based on 1% total fund value per annum
Investment income based on reinvesting rental income in a fund with a return value of 6%
The above figures are for illustration only.
The value of investments can go down as well as up.
There is no guarantee that you will achieve the above stated figures.
Comparison with a Traditional Pension Fund
€304,000 invested over 10 years would give you a return of €623,709. That's almost €93,000 less than you would return from our illustration, and you have complete control over your investment.
Key Benefits of a SSAP
- A Summary
Why Choose Cregan Kelly O'Brien for Pension Advice
Colm Kelly - Financial Planning & Advice
Why Cregan Kelly O'Brien?
Collaboration sits at the heart of our offering. Taking an overall view of your financial situation and challenges enables us to help you make better choices.
We bring our expertise in insurance, financial planning and accounting together to enable us to work with you to address all of your insurance and financial challenges. As a result of taking this broader look at your affairs, we can ensure that all the solutions that we put in place fit together, maximising the benefits to you and ensuring that costs are kept as low as possible.