# Moving property out of Company into SSAP



## JJ2000 (2 Sep 2005)

Hi

Myself and another lad own our limited company 50/50. Around 5 years ago we bought a building in the company's name; and we now reckon that the buildings worth about 140% of what we bought it for. We took out a 75% mortgage and this is now about 40% paid off. We're letting half the building as well so the company's getting rental income but this is being hit at 25% tax.

What we want to know is how could we move the building into an SSAP? I think there's arm's length rules and all that but can it be done? Or would we have to sell the building, and could we take the gain and use this as a lump sum contribution from the Company to the SSAP, and then the SSAP could use that as a deposit (along with borrowings from a bank) to buy another property?

Also, does anyone know if and how banks/mortgage providers are lending to SSAPs?

Any insight gratefully received...


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## RS2K (8 Sep 2005)

SSAP will not work. Arms length rule broken.  

An ideal situation is where the property is owned by individuals who effect a pension mortgage. Interest on the loan is covered essentially by rental income from the co. and the capital is paid back by co. paid pension premiums.

Any lender will lend to pension mortgage/ssap projects within their usual lending criteria.


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## Friday (9 Sep 2005)

I think you will find that there are not too many lenders lending to SSAPs.


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## JJ2000 (12 Sep 2005)

Thanks for the replies.

With regard to the points raised, 

(1) my understanding of a pension mortgage was that is was in effect an endowment type mortgage, where the provider basically invests in funds with the gamble that the fund performance will beat or match the capital plus interest value of the mortgage by the target retirment date. Does anyone know if you can just take out a traditional annuity, like the first reply above suggests? Anyone know which banks/lending institutions would offer this type of pension mortgage?

(2) if you already have a pension with a life company or whatever, can you run an SSAP and/or pension mortgage alongside it at the same time? I've heard informally that you can, so long as the total value of your contributions to all your pensions doesn't exceed the overfunding criteria (which are supposed to be based on an actuarial calculation, so how does that work??!!)

(3) does anyone know which lending institutions actually do lend to SSAPs for property investment? or is this a case of having a chat with your oh-so-friendly bank manager?

(4) what services are out there for fixed price (i.e. not a percentage of the fund) pensioneer trustees for SSAPs - I've heard of figures like EUR4000 for set up and then EUR1250 per annum, or another provider saying EUR2500 setup and EUR2500 per annum - does anyone know which companies are offering fixed price services for trusteeship?

(5) what happens if you have a disagreement with your trusteeship company after a few years? how do you get rid of them and appoint a new trusteeship?

Thanks for the feedback so far... and any other comments...


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## Friday (16 Sep 2005)

1. Pension Mortgage is similar to an endowmentmortgage - however it is extremely tax efficient. Definitely worth considering as an option. Most of the major banks will do pension mortgages. Try BoS.
2. Yes, you can run an pension mortgage via an insurance company contract alongside a SSAP. 
3. SSAP lending is in its infancy with all lenders. Suggest you try your pension adviser or trustee company for direction.
4 & 5. Don't know the answer to these.


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## JJ2000 (16 Sep 2005)

Thanks Friday for that feedback

with regard to (4) and (5) the place I got the EUR4000 startup and EUR1250 was off this link



(and no I don't have a vested interest in this) - I've since heard of other figures as low as 0.25%, and the other flat-fee figure I mentioned (EUR2500 startup and EUR2500 on going - this from a small-medium local accountancy firm).

I have another question, that was referred to in my original post - say you sell the building in the Company and the company makes say EUR400,000 profit (after paying CGT and getting rid of the mortgage) - can you pay that EUR400k as a Company contribution into a pension (be it an SSAP, or an Executive Pension) without any tax implications?

Again, thanks in advance for any comments/insight received


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## Brendan Burgess (16 Sep 2005)

I use Terry Crilly of SIPF Ltd to act as pensioneer trustee. He set it up some years ago. The service is excellent. He is well informed and prompt.

www.sipf.ie

Brendan


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## GreatDane (16 Sep 2005)

RS2K said:
			
		

> ...
> Any lender will lend to pension mortgage/ssap projects within their usual lending criteria.


 
Sorry, but oh no they won't ... not if they understand the position about lending to Self Admin Small Pension Schemes correctly etc.

As *Friday* has so nicely put it above, there are too many lenders lending to SSAPs ... too many lenders who don't know what they are doing, I fear !  (& yes, I am in the know on this topic btw, I kind of work in the bizz ....  )

As has already been correctly pointed out, Self Administered Schemes & very different from Pension Backed Mortgages.   Lending policies are different for both, the tax benifits are different for both, the ownership of the property is different for both.

If you considering a self administered fund, you must have a Revenue approved Pension Trustee & to the best of my knowledge, there are only about 50 in Ireland.  I've yet to see any offering "discounted" fees, but hey, they have a near monopoly situation so Im not suprissed.   Personally, I've worked with:  Independent Trustee Company (ITC),  M&F Finance in conjunction with Custom House Capital,  Harvest Financial,  Inverdee ... they all appear to be fine. 

The trick to Pension Backed Mortgages, from a lenders point of view & for any borrower who is really gives a **** is to put a clause in the loan agreement that states there must be a full review of the performance of Pension Fund annually, with a qualified advisor, to ensure the fund is performing in line with expectations.   This will ensure regular reviews & where needed, appropriate action is taken ... or at least highlighted as being needed, without the risk of a significant shortfall occuring when its too late to do anything about it (a mega problem, with endowments in the past).






			
				JJ2000 said:
			
		

> .... does anyone know which lending institutions actually do lend to SSAPs for property investment? or is this a case of having a chat with your oh-so-friendly bank manager?


 
In my experience, I understand Bank of Ireland Private & Bank of Scotland Ireland both do for certain, AIB have done some but not sure if they are doing them at the moment or not (unconfirmed stories doing the rounds) ...  all 3 know what they are doing, based upon the documentation I have seen.




			
				JJ2000 said:
			
		

> ... what services are out there for fixed price (i.e. not a percentage of the fund) pensioneer trustees for SSAPs - I've heard of figures like EUR4000 for set up and then EUR1250 per annum, or another provider saying EUR2500 setup and EUR2500 per annum - does anyone know which companies are offering fixed price services for trusteeship?


 
Those figures are similar to the ones I've seen .... infact, they are not the worst.  As I've mentioned previously, you'll be lucky to negotiate significantly cheaper fees than those you mention imho.




			
				JJ2000 said:
			
		

> ... what happens if you have a disagreement with your trusteeship company after a few years? how do you get rid of them and appoint a new trusteeship? ...


 

As the current requirement is to have a Revenue approved Pension Trustee appointed, you will have to appoint a new Trustee to replace the old one.   No reason why you cannot change, but it will require significant documentation to support the transfer from one Trustee to another ...

The opportunity to avail of SSAPs is not for everyone, given the costs of setting them up, the limited expert advice available throughout the marketplace etc.  Definitely do your research before you get into one .... but for some of the population, they are an excellent product imho.

Regards


G>
http://www.rpoints.com/newbie


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## JJ2000 (19 Sep 2005)

Thanks everyone for that information - there's a good selections of options to consider based on those replied.

I was just wondering, going back to my earlier post, if anyone knew about the option of say you sell the building in the Company and the company makes say EUR400,000 profit (after paying CGT and getting rid of the mortgage) - can you pay that EUR400k as a Company contribution into a pension (be it an SSAP, or an Executive Pension) without any tax implications?

Again, any info gratefully received


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## Conan (19 Sep 2005)

Yes, the Company can put a lump sum into an Executive Pension (of whichever type), but subject to Revenue funding limits (which will depend on your age, current salary, any existing pension assets).
Also any large lump sum investment will be spread for tax relief purposes over 5 years (you can invest the lump sum but the Company can only offset 20% against Corporation Tax for each of the next 5 years). 
You may be able to accelerate the tax relief depending on the level of annual contribution (if any).


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## Friday (20 Sep 2005)

As a pensioneer trustee is a representative for the Revenue I imagine you will need authority from the Revenue to replace the pensioneer trustee.


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## Conan (20 Sep 2005)

If you have a Small self administered Scheme you need to have a Pensioneer Trustee. The Revenue have a list of approved Pensioneer Trustees. However you do not require Revenue approval to replace one Pensioneer Trusree with another. You just have to have one.


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## JJ2000 (22 Sep 2005)

Hello all - thanks for all that information - there's some good information in there to consider.


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