Buying investment property through your pension

Private property investors in Ireland are increasingly using their pension fund as the way to acquire buy to let residential and commercial property.

The tax advantage

The biggest reason is tax.  Invest directly in rental property in Ireland and you’ll be taxed up to 52% on the income it generates, plus 33% on gains when you sell.  These tax burdens disappear if you purchase the property using your pension. That accelerates your wealth.

When you invest in property through a SSAPS, the costs, such as land purchase, building, and professional services are borne by the pension.  When rent starts to flow, it is not taxed.  As with any buy-to-let, you can gear your investment by raising a mortgage against the property, potentially increasing returns further.  And if you sell the property, any capital gain is tax-free.

Raising debt

You can raise mortgage debt to assist with the purchase and the property fund can even be registered for VAT.

Your property after you retire

On retirement, the property can be transferred in specie to an Approved Retirement Fund (ARF) and can continue to generate a post retirement income. Indeed, it can ultimately form part of the ARF holder’s estate on death which means it can be passed on to the ARF holder’s family.

Read on: How to set up a SSAPS