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We source property in the UK for Clients to purchase privately or via their pension plan. These properties are typically ‘High End’ and very Centrally located at affordable prices. Some properties completion term from 6 - 36 months ‚ so if you want to buy off plan or become a Landlord straight away the choice is yours! |
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Property via your Pension
If you are self employed‚ a company director‚ senior employee or personal pension holder‚ it may be possible for you to purchase a property with your Pension. You may also be able to use your existing pension fund to cover the deposit. Similar options may be available if you have a small self administered scheme‚ executive scheme‚ personal retirement bond or existing transfer value.
The revenue imposes restrictions and limits on this type of borrowing. The maximum level of borrowing through a Pension Scheme will be in the region of 75% of the property value. Lending institutions tend to operate on this basis. The maximum term for repayment (capital and interest only) cannot be greater than 15 years.
The following advantages make borrowing to purchase a property via a pension fund/trust even more attractive;
- No tax on rental income.
- No Capital Gains Tax on disposal of the asset within a Pension Fund.
- Receive PAYE and PRSI relief on the fit out and mortgage repayments at your higher rate of Tax.
- Property value growth is tax free.
- Rental income can be re-invested into other asset classes.
- Property can transfer to an ARF at retirement.
- Rental income in retirement can replace annuity income.
- Property can subsequently pass onto your next of kin on death in retirement.
- Borrowing in a pension fund to purchase property is on a "non recourse" basis (no personal guarantees required).
- Significant tax relief on pension contributions to purchase the property.
- Tax free lump sum at retirement.
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Legislation
The Pensions Act 1990‚ Pensions (amendment) Act 2002‚ EC Directive (41) 2003 on the activities and supervision of Occupational Pension Schemes‚ Finance Act 2004‚ Social Welfare and Pensions Act 2005 and Finance Bill 2006 have all addressed the area of pensions and investments in occupational pension schemes.
Article 18 (2) of the EC Directive 2003 prohibits schemes from borrowing for investment purposes other than in prescribed circumstances. Section 36 of the Social Welfare and Pension Act 2005 also prohibits such borrowing other than in circumstances which may be provided by regulations.
In Ireland‚ Article 5 of the Occupational Pension Schemes (Investment) Regulations‚ 2005 provides that the Trustees of one member arrangements may borrow money. This will allow one member pension arrangements to borrow to invest in property.
Details above are for discussion only. We are not tax advisors or pension consultants. You should refer to your Pension advisor to discuss this in more detail. As part of our service we are also happy to put to you in contact with a financial advisor.
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For more information on any of the above or for a
specific quote please email
lorraine@doneganfinancial.com or contact Lorraine at 045 901 201
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