SSAP v. Pension-backed mortgage

[olivia]

I have just talked to a financial advisor about setting up an SSAP with a view to the pension fund purchasing a property costing in the region of 300K. He advised strongly against this as he felt that the amount was to small to warrant an SSAP. He recommended taking out a pension-backed mortgage on the property where I would own the property myself and use my existing exectutive pension as collateral for the mortgage. Has any one any view on this advice?

 

[Conan]

Without seeing all the details, I would tend to agree with the advice. Owning the property personally (even if the capital is to be re-paid out of the tax free lump sum from the pension plan), is better and probably less expensive for a property costing €300k.
Under a Pension Mortgage:
- you can offset interest against rental income
- there are no restrictions on how the property is used (there are limitations if the property is owned by an SSAP)
- any gains on sale are subject to 20% CGT (as opposed to Income Tax if taken from an ARF/Annuity in retirement).

Professional advice is important. Make sure you understand the various options.