The 8 Things You Need to Know About Pension Property – Part 2

In part 1 of this series of blogs, we discussed what pension property is, why consider it, why now is a good time and what the rules are. If you have yet to read part 1, please click here.

 5. So, how does pension property compare to investing in property outside of a pension?

If we take the below example of a property valued at €200,000 bought outside a pension and the same property bought through a pension without gearing:

Based on the assumptions above you could expect your gains to be over €300,000 higher than if the property was purchased personally and tax was paid.

6. What kinds of pension schemes can invest in pension property?

There are a range of self-administered pension structures available which allow the pension member to invest in pension property. ITC’s offering includes the Small Self-Administered Scheme (SSAS), the Personal Retirement Savings Account (PRSA), the Buy Out Bond (BOB) and the Approved Retirement Fund (ARF), which are available depending on the pension investor’s employment and retirement status.

7. Can you invest in social housing?

Many pension investors are increasingly focused on investments that provide environmental or social benefits in addition to monetary returns. The impact of the housing crisis in Ireland in recent years has brought the need for higher levels of social housing to the fore. Investment in such property can be facilitated through pension schemes. Typically, these would involve the grant of a long-term lease to the relevant local authority with regular rent reviews.

8. Can borrowing be used?

ITC can facilitate mortgages of up to 50% loan to value. These can be arranged by the pension member and their financial advisor from a variety of lenders for both residential and commercial property purchases. Pension borrowing is always granted on a limited recourse basis, meaning that the lender cannot pursue the assets of the trustees or the pension scheme member in case of default. Alternatively, it is also possible for pension members to pool their resources to purchase one or more properties. In particular, small family groups and business colleagues tend to avail of this option.

For further information, please speak to your Financial Advisor or email justask@independent-trustee.com.