# Investment property 'through a pension' - w. tax relief?



## DrMoriarty (16 May 2005)

The key post linked to here includes a reference to purchasing investment property 'through a pension', thereby gaining (100%..?) tax relief - but the unregistered poster hasn't replied to Clubman's query at the end.

Can anyone shed any light on this? In particular, I'm wondering whether a stay-at-home spouse with no income/pension scheme can avail of such an arrangement, and under what conditions. I've had a quick trawl through the Revenue website, but haven't turned anything up yet...


_[Edit: I edited this immediately after posting to correct the thread title, but it doesn't seem to have done so in forum view...? Sorry!]_


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## Lemurz (17 May 2005)

*Re: property(of your choice) through a pens*

I assume the posting refers to a pension mortgage?

http://www.iibbank.ie/Private/PensionMorts/?paraID=25&subMenuID=229&iconID=4


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## DrMoriarty (18 May 2005)

*Re: property(of your choice) through a pens*

Thanks, Lemurz. It looks like one would have to be self-employed for taxation purposes - which might be an option for us in the future...


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## RS2K (19 May 2005)

*Re: property(of your choice) through a pens*

Employees/Co. Directors can avail of a pension mortgage too.


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## CCOVICH (19 May 2005)

*Re: property(of your choice) through a pens*

There is a section on using property as a pension in the First Active guide that they have been advertising on the radio/TV which I finally received yesterday (after 3 weeks....).  Some light reading for the hols next week!


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## RS2K (19 May 2005)

*Re: property(of your choice) through a pens*

It can be done. A few problems with it though:-

1/. Lack of investment spread. To have all your pension in property is unwise. To have all of it in a single property is madness.

2/. Costs. Legal fees, stamp duty etc.

3/. Maintenance.

4/. To eventually cash in you have to sell up, invest in AMRF and ARF's etc.  

No such thing as a free lunch, and nothing is ever straightforward.


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## DrMoriarty (19 May 2005)

*Re: property(of your choice) through a pens*

Thanks, guys,

I applied for that First Active guide too, so I'll do a bit of 'light reading', as CCOVITCH puts it!

I see your points about the downside, RS2K, but I wonder if it still mightn't be an attractive option, in certain circumstances? I'm in permanent PAYE employment, paying 42%, and using my unwaged wife's tax credits.

If she were to go into business for herself at some point in the future, could she then borrow (on the strength of other securities), invest in a pension property and get sufficient tax relief to make it a more worthwhile vehicle than a standard PRSA? I'd envisage that she'd only buy and sell once, not over and over...


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## RS2K (19 May 2005)

*Re: property(of your choice) through a pens*



			
				DrMoriarty said:
			
		

> Thanks, guys,
> 
> I applied for that First Active guide too, so I'll do a bit of 'light reading', as CCOVITCH puts it!
> 
> ...



A pension backed loan is an attractive vehicle in the right (such as your own) circumstances I reckon.

The gross repayments (interest to lender + pension premium + life assurance) will be higher, but tax relief is absolutely maximised. Net result is attractive. It's a more efficient endowmenttype (interest only) loan. 

For "Average" investors a decent PRSA will give a much better investment spread, and is good value.

Horses for courses I guess.

I'm personally wary of over exposure to property, simply because everyone  seems to be at it! If fashion changes, and it will, the downside is potentially bleak.


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## DrMoriarty (19 May 2005)

*Re: property(of your choice) through a pens*

Thanks again, RS2K. One last question - would the property have to be in Ireland (where we're tax resident)?


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## nopotatos (20 May 2005)

*Re: property(of your choice) through a pens*

[broken link removed]


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## RS2K (20 May 2005)

*Re: property(of your choice) through a pens*



			
				DrMoriarty said:
			
		

> Thanks again, RS2K. One last question - would the property have to be in Ireland (where we're tax resident)?



I don't think so. 

A lender might not be interested with anything outside of Ireland however. Don't forget pension benefits are non assignable, so this kind of lending is not straightforward.


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## RS2K (20 May 2005)

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				nopotatos said:
			
		

> [broken link removed]



Self admin. pensions are a nice idea, but are always in my experience much more expensive than PRSA's, and require  high contributions to make them work on account of the fixed costs. Annual accounts are req'd and every 3 years an actuarial review is mandatory. They are "different" however, and work for real hands on investors.

I reckon €30k per annum is about the minimum effective contribution.

The self employed suffer a disadvanatage as opposed to Co. Directors as  a bespoke unit trust needs to be set up.

Gearing of SSAP's is also under review, and may be abolished soon.

Check out www.wealthoptions.ie too.


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## stuart (20 May 2005)

*Re: property(of your choice) through a pens*

Pension mortgages are an good way of saving for retirement but in general they are not for eveyene (even those that qualify)

The costs invloved don't justify it unless you are talking about serious contributions

Pension backed mortgages are much more suited for individuals of incomes of less than €100k pa

Less expenses, higher gearing available, less initial outlay, less risk and no need for an existing pension fund of around €100k

And most important of all great flexibility

The only down side is there is a possible CGT hit at retirement but this also can be avoided

stuart@buyingtolet.ie


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## DrMoriarty (20 May 2005)

*Re: property(of your choice) through a pens*

Thanks guys - I'll look further into it as/when the circumstances evolve...


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