# Is now a good time to invest in a pension?



## niamh73 (19 May 2009)

I own a rental accommodation, the rent covers the interest only mortgage by €350, should i invest that money into a pension or should I change the mortgage to principle and interest and start paying off the mortgage outright?


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## StevieC (19 May 2009)

If it was me I'd reduce the mortgage.


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## Slim (22 May 2009)

niamh73 said:


> I own a rental accommodation, the rent covers the interest only mortgage by €350, should i invest that money into a pension or should I change the mortgage to principle and interest and start paying off the mortgage outright?


 
I would invest that €350 in a regular savings account or a similar deposit as you never know when the property will become vacant and it would be nice to have the mortgage covered for a while. There seems to me to be no benefit in reducing the mortgage as the debt is carried by the rental property and you would be a long time saving that back in annual interest payments. It is a business  and not your PPR.  Slim


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## 7seats (22 May 2009)

How about investing in a stock based pension fund? That way you spread your risk/reward across Property and Shares


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## upport (23 May 2009)

I like Slim's advice,build up a fund to cover costs associated with the rental property (6 months rent would be a target).Are you liable to income tax on the rental income?
Reason for not reducing mortgage:if you intend selling the property in the future,profit from sale will be subject to capital gains tax.


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## paddy26 (10 Jun 2009)

I dont think you will get the tax benefit on rental profits (invested in a pension) if you dont have Schedule D or E income.

Also, paying back the mortgage will not change you potential CGT charge.

With interest rates low and bonds rates high (see Bord Gais today in excess of 5% yield) I would invest the money in something like this (a lot of the bank also have regular saver products with high interest rates).

If you took out your mortgage years ago you probably will have a pretty competitive rate therefore investing your money in a safe product may be a better use of funds.


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## zachary (11 Jun 2009)

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## LDFerguson (12 Jun 2009)

zachary said:


> Choose the best way of investing money with good returns. Investing money while you are earning means making your later life secured! Get acquainted with the best way to invest money through bankonyourself.com You can even invest your money in life insurance & make your future with strong finance.


 
Yawn...spam.


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## upport (13 Jun 2009)

paddy26 said:


> I dont think you will get the tax benefit on rental profits (invested in a pension) if you dont have Schedule D or E income.
> 
> Also, paying back the mortgage will not change you potential CGT charge.
> 
> ...


 
I was wondering about income tax liability on the rental income rather than obtaining pension tax relief by investing surplus rental income.

Regarding CGT.......are outstanding mortgage,legal costs,repair costs etc not off set against profit (if any profit,in current downturn) to reduce CGT liability?


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## paddy26 (13 Jun 2009)

The CGT is calculated by sale price less purchase price. What you have borrowed on it is irrelvant. Legal costs can be offset.  Also, any previous loss forwards can be utilised.  Depending when you bought the property there may also be indexation on the purchase price.


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