# Investing pension in Irish property



## redillon (8 Mar 2011)

Hi i have a pension worth about 12,000euro from a job i left 4 years ago,it is in a bond and is doing nothing for me.At the time there was 5 of us left this job with similar totalling about 80,000,we have been offered a chance to invest in Florida property but wanted to invest in something in Ireland,we have tried finding out investments in Ireland over 20 year + term but having no luck.If anybody have information please reply,many thanks.


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## LDFerguson (8 Mar 2011)

I'm not sure if the query relates to sourcing the pension vehicle or sourcing the property investment.  Broadly there are two methods of investing in property using a pension fund: through a unit-linked pension fund or directly.  

Most of the Irish pension fund managers offer property funds.  There are a couple of providers offering self-directed Buy Out Bonds that facilitate your pension fund buying a property directly.  

With either type, as it's the pension fund and not the individuals that owns the property, rental income is paid into the fund tax free and no CGT arises on the eventual sale of the property for a profit (assuming that's what happens). 

At the moment, it's difficult if not impossible for a self-directed pension fund to borrow.  This used to be popular.  That means that your current fund (€80,000?) would need to sufficient to buy the property outright, pay all costs of purchasing and allow scope for a contingency fund.

You should be aware of the risks inherent in switching your pension funds into a single asset class in a single small country, or even into a single asset if you buy a property directly.  This is not diversified at all.

It is likely that the current provider of your Buy Out Bonds has a range of fund choices available for you to switch into, including property funds, at little or no cost.  Have you looked at those options first?

Liam D. Ferguson


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## redillon (10 Mar 2011)

Thank you for your advice and we will look into the funds that you have given us,i hope you dont mind my asking but if we put our 80,000 to buy a property outright,does this mean that we can rent out property for 15-20years and hope that property price go up in value and at end of 15-20 years we get value of property and end.The reason i ask is that we would trust single property other then a bunch of other type of funds or bonds,many thanks


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## LDFerguson (11 Mar 2011)

Yes if you were to buy a property outright with your pension funds, rent goes into your funds without tax liability and if you eventually sell the property, there's no Capital Gains Tax liability on the profit. 

Be aware at all times that it's not you, it's your pension funds that own the property so when you eventually sell the property, the money goes back into your pension funds and in order for you to access the money, normal rules regarding retirement - tax-free lump sum, taxable annuity or taxable ARF apply.


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## redillon (13 Mar 2011)

Thanks again for your reply and if we go ahead with this plan we will post info so that others may consider this type of pension.I have noticed a lot of people asking this type of question on this site but very few ways put forward for people to invest,there must be millions of Euro in Irish funds just sitting there that could get Ireland going in these bad times,i have seen plenty of property offered in other countries but nothing in Ireland,thanks again and will let you know how we get on.


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