UK Property: SIPPS bombshell

[CoffeeBrew]

I know a few people in the UK who were expecting SIPPS to come to the rescue of the UK residential property market.

I don't think any of them saw this coming...

[broken link removed]

 

[markowitzman]

I think in essence the same thing has been done here in the budget as it is now less tax efficient to put property into pension. Pension mortgages less attractive.

 

[onekeano]

Hi Marko, can you elaborate?

What has changed for pension mortgages?

Thanks

Roy

 

[markowitzman]

1. Brian Cowen has introduced a new limit of EUR5 million on the maximum tax allowable pension fund on retirement. Where a retirement fund exceeds this limit, a once-off income tax charge will apply to the excess when it is drawn down.

2. Related to this change, a limit of EUR1.25 million has been set on the size of a tax-free lump sum that can be drawn from a pension.
I think it will make putting property in pensions less attractive due to income tax hit at the end. Income tax is double capital gains so in my eyes I would be thinking of keeping property out but I stand corrected.

 

[onekeano]

Ok thanks Marko, its a different league to me so no worries here

Thanks for the help.

Roy

 

[G123]

....is now less tax efficient to put property into pension

Marcowitzman, by this do you mean that it is only less tax efficient if you have a pension fund of €5m or more?