Self-Administered Director's Pension?

[ButtermilkJa]

I've heard recently about self-administered director's pensions. Specifically, how you have more freedom to use the funds as you wish, including buying property. I was also told that as it is a pension fund, there is no SD or CGT to be paid when buying or selling property for the fund. Is this true?

If so, could I use such a fund to purchase my apartment (PPP) if I decide to move to a bigger house in the future, therefore allowing me to keep the property as an investment? Or would this be classed as some kind of benefit to me and therefore taxed at some level?

EDIT: I have been reading this thread already, but no mention of SD or CGT.

 

[ClubMan]

Don't such self administered funds have some sort of "at arm's length" or "no personal use" rules precluding you from buying stuff for your own use (e.g. PPR, classic cars, art etc.)? Have you tried ? Perhaps a more "regular" pension mortgage (i.e. interest only mortgage plus a pension designed to pay off the capital and provide retirement income) is a more realistic/appropriate option to consider?

 

[ButtermilkJa]

Hi ClubMan, thanks. Yes that's what I figured would be the case, some sort of "arm's length" clause. Although, strictly speaking the purchase would not be for 'personal use' but more for pension fund growth.

I've done a bit of searching and came up with some interesting info, including...

From [broken link removed] on sbpost.ie

Acquiring property directly through your pension fund

Since March 25, 2004,...

According to the article, rental income is exempt from tax and CGT is not payable upon disposal of the asset. No mention of SD... or personal property!

 

[ButtermilkJa]

Ah, the first link in your Google search brings up this...

"Property investment must be at arms length before and after. So a previously held property cannot be bought-out by one's pension fund."

Seems strange though, considering I would be allowed to by a property next door if it was for sale, but not my own. I wouldn't be gaining anything from it other than a quick sale when I sold it as my PPR.

Of course if I was to allow a family member or friend to rent it out and therefore guarantee income for the fund I suppose that would perhaps be where they are coming from?

 

[ClubMan]

If you are seriously considering this (SSAP) option then you should get professional advice. Especially if you cannot see how you would not benefit directly from a pension fund buying your PPR etc.

 

[ButtermilkJa]

I'm not seriously considering it, if I was I would get professional advice, as with any important financial decision. As I said I just heard about it and thought I'd try and find out some more.

But I still can't see any direct benefit to myself should I sell my PPR to my own Pension Fund. If I sell at market value, how is it beneficial to me (provided I don't sell at above market value or allow family rent it out)?

1) I would have sold the property at market value anyway.
2) The pension fund would have purchased a similar property at market value anyway.

Perhaps you can fill me in if you know how?

 

[money man]

Who independently verifies if it was market value if you buy and sell it?

Secondly you are buying your own house (i.e. giving yourself money) using money which you have avoided paying tax on in the first place.?

there are one or two other minor details like the above which may be an issue for the revenue commissioner!

 

[ButtermilkJa]

Who independently verifies if it was market value if you buy and sell it?

I would have thought this could be easily done with valuations, no?

Secondly you are buying your own house (i.e. giving yourself money) using money which you have avoided paying tax on in the first place.?

If a stranger bought my house they'd be giving me money too.
Yes, I would be buying a house with money I didn't pay tax on, that's the benefits of a self-administered director's pension? Any property provides that same benefit, not just my own.

there are one or two other minor details like the above which may be an issue for the revenue commissioner!

I do realise that there are Revenue rules that have to be followed and therefore I would always follow them, as I always do, but I'm just finding it hard to see where the benefit to me is in buying my own property. Other than lining up a buyer myself and therefore avoiding EA fees.