# Property as pension



## clarecelt (6 Feb 2012)

Hi,

I am 42 yrs old with approx 50K in pension fund mostly saved in the last 10 years. I have never spent too much time looking at pensions but have invested in property and currently have 3 rental properties with approx 15 years left to clear mortgages..

I am hoping to look at ways that I can pay off the properties in 8 to 10 years as I would like to semi retire when in early 50's

I have looked at many pension calculators all indicating what you should save per year to amass a certain pension when you reach a certain age. However I am wondering if my reasoning makes sense that that my rental income can be pension for me and wife or is there a way to put property into some tax efficient vehicle for purposes of pension.

Thanks
 cc


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## 44brendan (7 Feb 2012)

The is a pension company called the Independent Trustee Company Ltd who specialise in property related pension investments. I cannot recommend them as I have no personal dealings with them, but perhaps they might be worth giving a call!


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## Jim2007 (7 Feb 2012)

clarecelt said:


> However I am wondering if my reasoning makes sense that that my rental income can be pension for me and wife or is there a way to put property into some tax efficient vehicle for purposes of pension.



I would consider it very risky to place all my pension savings in property or any other single asset class for that matter....


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## LDFerguson (8 Feb 2012)

If the pension fund is an Occupational Pension Scheme you can retire early from age 50 onwards with the agreement of the scheme trustee.  Otherwise that fund is locked up until you're 60, except for an ill-health early retirement.  

I would agree with Jim's comments above about putting all your eggs into one investment basket / asset / country.  

In any event, as you already own the investment properties, you cannot now pull them into a self-administered pension as to do so would require you to sell them to your own self-administered pension scheme.  Self-dealing is prohibited by Revenue rules on pensions.  

In theory you could sell the existing investment properties, invest the proceeds into a pension and then instruct the pension to buy other properties.  But the costs of doing that would be substantial and I'm not convinced that it would be a good idea anyway.  

You already have substantial exposure to Irish property.  My suggestion would be that you load up your pension with other investment assets in other countries.


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## clarecelt (8 Feb 2012)

I am hoping I can pay the properties off in the next 10 yrs and wondering if it is a good investment approach to keep the 3 properties and use rent as pension.


Liam as regard your suggestion on other investment assets in other countries do you mean to look at property in other European countries...??


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## Gekko (8 Feb 2012)

I'd echo the sentiments of other posters.

You should aim to have a diversified pension portfolio.

If everything you have is tied up in property, you're massively exposed to volatility in (say) the rental market or the property market generally.

You should also ensure that you're building up your pension pot in a tax efficient manner.

What are your income levels like? Are you or your wife currently contributing to some kind of pension scheme?

It might be worth speaking with a pensions advisor...there are guys who work for a flat fee and don't therefore shepherd you towards the most lucrative options from their perspective.


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## LDFerguson (9 Feb 2012)

clarecelt said:


> I am hoping I can pay the properties off in the next 10 yrs and wondering if it is a good investment approach to keep the 3 properties and use rent as pension.


 
That depends on the yield.  To work it out, figure out how much rental income you'll have AFTER paying Income Tax, second property tax, letting agent, repairs and any other expenses you may have.  Then divide that figure into the price you'd get (after CGT and selling expenses) if you sold the property.  The percentage you're left with is the yield. Is the yield greater or less than the return you could get by selling the properties and investing the proceeds elsewhere?



clarecelt said:


> Liam as regard your suggestion on other investment assets in other countries do you mean to look at property in other European countries...??


 
No.  From the information you've given I think you've enough property as investments already.  For reasons of diversification, I would actively seek to exclude Ireland and property from any additional investments.


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## Bronte (10 Feb 2012)

When working out the tax on rental, don't forget that in the future you may be at the lower rate of tax as you will no longer have employment income.


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## clarecelt (10 Feb 2012)

Thanks everyone ,
 In hindsight I should have given the figures.

*Property 1 (Home)*
Value: 320,000   
Mortgage: Nil

Comment: My family home

*Property 2 *
Value: 160,000
Mortgage: 148301
Rate: 2.45% Tracker
Rent: 750

*Property 3: *
Value 155000
Mortgage: 63126
Rental: 650
Rate:2.05% Tracker


*Property 4:*
Value: 150000
Mortgage:116,113
Rate: 2.45% tracker
Rent: 600

Rent is calendar month.

Pension:

I have approx 50K in company pension scheme but more interested in working to pay properties off in the next 10years.

The reason I posed this question as that I would like to see my property investment as a pension/salary which I could supplement with other part-time work.

Based on the rents above I would definetly be on the lower salary threshold and paying tax at 20%

Thanks all for your replies and interesting to see the different criteria people put on property as an investment, ie yield vs other investments, for me it is rental income(regardless of value which may be a wrong approach if you compare to other investments but I see lots losing their backs on pension funds, shares etc and see that as a long term investment property is still good.) The value in property for me is the  that I can strive to ensure a good balanced  life for my wife and children which I strive to do every day and have shunned the excesses and extravagances seen in this country over the last decade.

Thanks


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