Property through your pension

~ Brian Flanagan, Flanagan Pensions and Investments Ltd

  Is it for you?

Do you think that there is currently value in the Irish property market?

Are you currently considering purchasing an investment property?

Would you like to do this, and also receive rental income in the most tax efficient manner?

Well, if you answered yes to one or all of these questions, then using your pension may be the answer. Firstly, let us take a quick look at the market itself. In the past 12 months, prime Irish property has seen a huge increase in activity and there appears to be a genuine belief that property prices in our main city’s as well as surrounding areas have bottomed out. Indeed, the figures would appear to agree. CSO figures released last month show that while Dublin residential property prices are 51% lower now than at their peak in 2007, they have increased by over 10% in the past 12 months. While this is by no means repeated nationwide, as rural property prices continue to struggle, it is clear evidence that green shoots are at long last emerging again in some parts of the Irish Property Market.

So what about my pension?

For those of you looking to invest, you can do so through a Self-Directed/Self-Administered pension scheme. Existing pensions can be transferred in also. Subject to certain conditions, some of which are listed below, Revenue allow the purchase of an investment property through a Self-Administered pension scheme, provided:

• The vendor is at arm’s length from the scheme and the scheme owner as well as connected parties
• The purpose of the acquisition is not for the disposal or letting to the scheme owner or connected parties
• Disposal of the property is on an arm’s length basis

Some important points to note are that the majority of purchases through a pension at present are cash buyers. The reason for this is that if you intend borrowing through your pension to purchase a property, then you are restricted to approximately 50% of the amount, excluding legal costs and liquidity requirements, while the maximum term for the loan is 15 years and an interest only loan is not allowed.

How is this more tax efficient?

Firstly, the fund you will be using within the pension scheme has been built up over time with full income tax relief on all premiums paid. While the investment growth of your current pension scheme, if any, since inception will not have been subject to DIRT or capital gains. Rental income from the property will be tax free and no capital gains tax liability arises on disposal of the property in future years.

To hear more about how Flanagan Financial Planning can help you with your retirement planning, contact Brian on 0469543464 / 0861990747 or email brian@flanaganfinancials.ie

Flanagan Pensions and Investments Ltd t/a Flanagan Financial Planning is regulated by the Central Bank of Ireland. Company Reg No 521482. Reg Address: Unit 6 Teach Bui, Main Street, Enfield, Co. Meath. Directors – Brian Flanagan (QFA, Pensions Dip), Laura Flanagan (Mortgage Certificate).

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