Retired - use ARF to buy investment property

R

Roro999

Registered User
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Retired recently from private sector and currently have €200k in an ARF with Irish Life and commencing 4% monthly income withdrawals shortly.
Is property investment open to me other than via cashing in the pot ?
 
I don't know if it's allowed or not. I assume it is.

But a more fundamental question is whether it is a good idea.

First of all if you have maybe €500k in investable assets other than the family home outside the ARF, then maybe that is ok diversification. But if you don't have significant assets, then it's too risky to plan your future based on one property.

Secondly, an ARF should be flexible. If you want to take out more than 4% for tax reasons or for spending reasons, you should be able to do so. If you have everything in an ARF you could be in trouble.

Second and a halfly , you have to drawdown 4% a year. But what if the tenant doesn't pay the rent and you can't draw down the 4%? I think you get taxed on it anyway.

So I would say not a good idea overall, whether or not you are allowed to .

Brendan
 
It's possible to transfer your Irish Life ARF to a self-administered ARF which can invest in property, but you'd need to check with Irish Life to see if you were locked into a contract with them which would penalise you for moving in the first 5 years. As Brendan says, whether or not you should is dependent on your specific circumstances. At present, rental yields are quite high so it's possible to take an income of 4% per year, pay the annual charges for the ARF and still have excess rent building up in the ARF bank account. But it would be risky putting all your pension eggs into a single property, as market conditions can change dramatically.

Regards,

Liam
www.ferga.com
 
Thanks. Am tied in to 5 years. My husbands ARF is with Zurich and is'nt tied in to a contract. About €150k in the ARF. Is it possible like you say to transfer from Zurich to a self administered ARF to purchase a single property ? I would be adding cash perhaps of €50k on top of €150k for the purchase. How would I go about looking into the process or could you please expand a little on whats involved ? Is my understanding correct in that rental income is'nt taxable and there is no cgt when property gets sold ? A few queries there but appreciate any guidance that can be given.
 
I’d strongly recommend taking some professional, objective retirement planning advice.
 
Marc said:
I’d strongly recommend taking some professional, objective retirement planning advice.
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Yes I would be doing this if going down the route of transferring my ARF into a self administered ARF.
 
You can do it, even buy the property between you but I am not sure why you would do it. Neither of you have a big retirement fund and tying it up in one illiquid asset is a massive risk to take. There are also liquidity requirements and fit out costs, legal fees etc so you would certainly be looking at buying a property for less than €300k with your money. I would recommend against it if you came to talk to me about it.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
LDFerguson said:
At present, rental yields are quite high so it's possible to take an income of 4% per year, pay the annual charges for the ARF and still have excess rent building up in the ARF bank account.
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Even if the net rental yield on the property is good it's probably not very efficient to have a surplus building up as a cash deposit.

OTOH if an equity-based ARF has a good year and you withdraw less than the return then the surplus is re-invested and you get the benefit of compound growth. This is all automatic.

This is all separate from the argument (which I agree with) that having too much of your wealth in Irish property is not a good idea.
 
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