Company directors, Self-employed and retirees may be able to use their private pensions to buy an investment property which may be an attractive alternative to holding all your retirement savings in shares, funds or cash.
However, it’s important to be aware of the rules that apply.
What are the tax advantages?
- Rental income can accumulate tax-free within the pension.
- No Capital Gains Tax (CGT) is payable by the pension when the property is sold.
- Pension contributions may qualify for income tax relief.
- At retirement, you may be able to take 25% of your pension fund as a lump sum, with the first EUR200,000 potentially tax-free.
Can I live in the property?
No. Revenue rules require it to be a genuine pension investment.
- Family members or other connected persons cannot live in or rent it.
- Your pension cannot buy a property you already own.
What pensions can generally buy property?
- Non-Standard PRSAs
- Approved Retirement Funds (ARFs)
- Buy-Out Bonds
What costs should I consider?
- Stamp duty
- Solicitor’s fees
- Insurance
- Local Property Tax
- Management fees and service charges
- You should also retain sufficient funds to diversify your pension investments
Can my pension borrow?
Sometimes, borrowing may be available within certain pension structures, subject to lender and pension rules.
The Bottom Line
Buying property through your pension can provide valuable tax advantages, but strict rules apply. Before proceeding, check that your pension allows property investment and that the purchase fits your overall retirement and investment strategy.
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This information should be treated as a guide only. Contact us for tax advice tailored to your needs.