# Can I use my Deferred Pension Fund to buy Property



## cuculan (19 Jan 2013)

I am currently in full-time employment, but also have a deferred pension from a previous employer. Is it possible for me to use this pension pot to purchase a property, i.e. transfer it our of the pension fund and into something that I can use to buy the propoert?


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## leroy67 (19 Jan 2013)

It's possible but not in your current structure unless you look at a pension backed mortgage, you need to seek advice, property can be bought directly through an ssap but you will have to meet all requirements including arms length rules,you can invest in syndicates etc through a self directed pension but this is different to owning the property yourself. In my opinion unless substantial amount in your deferred scheme (enough to buy the property without borrowing through the fund) you will find it difficult to do.


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## Conan (19 Jan 2013)

In theory this might be possible.
You possibly could transfer your deferred benefit ( depending on the type of scheme it is in) into a "self directed" arrangement - either a PRSA or a Buy Out Bond. Depending on the value of your fund this might be sufficient to buy a property (some gearing might be possible) . 
You should bear in mind that there are a number of Revenue rules in terms of a pension fund buying property e.g. Arms length, no personal use etc.
Also such a structure can be more expensive I.e property management, insurance, legal costs etc.

I suggest you seek professional advice as there are not many "self directed" product providers offering PRSAs or Buy Out Bonds.


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## LDFerguson (19 Jan 2013)

Yes, you can transfer it into a self-directed Buy-Out Bond or PRSA, which can buy property. There would need to be sufficient funds to buy the property and leave a sinking fund over. While it is theoretically possible for a pension fund to borrow money to buy a property, in practice it is very difficult to find a bank who will lend to a pension fund at the moment. 

Be aware of some of the rules around this: - 


The property must be an "arm's length" investment. Your pension fund cannot buy a property from yourself or anyone connected to you. It cannot rent the property to yourself or anyone connected to you.
Although your pension fund can spend money for ordinary repairs, it cannot buy a property where the value will only be realised if the property is rebuilt or redeveloped. So your pension fund could not, for example, buy a run-down cottage with a view to demolishing it and building a bigger house.
You cannot join with your pension fund to buy a property. So if your pension fund has €100,000 and you have €100,000 personally, you cannot put those two amounts together to buy a property.
Several pension funds can buy a property together. So if you have €100,000 in your pension fund and your brother has €100,000 in his, you could set up a structure to buy a property together. Usual warnings about buying a property with someone else apply.
Liam D. Ferguson


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## cuculan (19 Jan 2013)

*Buying a Property with my Pension*

Thanks guys for your replies. It appears the arm's lenght rule is a problem. So, if I retired from my Deferred Pension scheme, is it then possible for me to use the pension pot to purchase a property that I want to live in?


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## leroy67 (19 Jan 2013)

any property bought by or within the pension fund has to be arms length,  you could look at using your future pension fund value to buy a property you could live in (pension backed mortgage) but in reality you will struggle to find a bank to do the interest only lending.


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## LDFerguson (19 Jan 2013)

cuculan said:


> Thanks guys for your replies. It appears the arm's lenght rule is a problem. So, if I retired from my Deferred Pension scheme, is it then possible for me to use the pension pot to purchase a property that I want to live in?


 
If you're over 50, you can look at retiring that Deferred Pension fund.  You'd be entitled to withdraw a portion of it as a tax-free lump sum and the balance would have to be used to provide yourself with an ongoing income, by one of several methods.  

If the lump sum is sufficient to buy a property, you're free to do what you like with it.  But you can't use the entire fund to buy a property that you intend to live in.


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## cuculan (19 Jan 2013)

*Purchaing Property with Pension*

Thanks for the info. I now know where I stand with the pension and property. I will need to find an alternative approach.


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