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Buying Property through your Pension

Turning bricks and mortar into strong cashflow for your retirement.


I found myself after a recent birthday “the big 50” thinking about my Granny Ankers “LEGEND” who lived till she was 100 years old and I was suddenly concerned how could I afford to do that?

Even if hopefully, I am made of the “same stuff” and live to this ripe old age, these are very different times we live in now and the cost of living and inflation is heading one way only and that is up.

Through my studies in accountancy, tax, and finance with ACCA and my 20 years experience as a property developer, investor, project manager, landlady and student accommodation provider, I would safely say I have gained invaluable knowledge working in all walks of the property industry and have an absolute passion to learn, grow and do more…

But as we all know in this business it can be hard to make the figures work after taxes and associated costs. Property can be a fickle friend as we found out in the last recession.

Though in terms of an investment and as safe as bricks and mortar may be from my perspective, they can be a difficult asset class to liquidate at the specific time when you need the cash. Everyone needs to do their own due diligence and research the best option of investing for them.

For this reason, I started looking into a cash flow plan for my future that would give me the reassurance that when I retire, I would be able to afford to live the way I wanted to without having to worry all the time about the cost of living going up and I suppose like us all just to know that we are going to be okay in that regard.

I looked at diversifying into other types of investments but when I fully understood the benefits of buying property using my pension, I felt compelled to get my next property into this tax efficient investment vehicle as I believe it truly allows your investment to be the gift that keeps on giving when it is structured correctly.

This is a highly regulated type of investment and you will need a group of professionals to help you to set it up but when it is done correctly it will ringfence your pension income and the Approved Retirement Fund (ARF) can also be used tax efficiently when you pass away, so your pension fund is simply passed to your spouse or down to your estate for your family.

Within the last 18 months I have completed the purchase of 2 properties through my pension and the pension company trustee managed all relevant parties to get the properties market ready and let.

In all honesty with the Revenue arm’s length rules and all of the other requirements outlined by the pension trustee firm I engaged this was not a straight forward process in comparison to how I had previously bought property and it was a steep learning curve, but a worthwhile investment of my time and money.

Because after doing some general analysis and crunching the numbers on these 2 pension properties in a comparison chart versus properties held personally, the 2 pension properties will generate more income (tax free), than if you had 4 properties held personally (after tax).

All the properties used in this example are located in the same area and are of a similar standard. The reason for this notable return is simply due to the taxation around holding a property in your own personal name versus within the structure of a pension.

NB: My findings only and not financial advice.

Buying Property through your Pension…

Turning bricks and mortar into strong cashflow for your retirement.

  • IN MY CASE: My Limited company made company contributions into my pensions on my behalf. In some cases your company can make special contributions along with your annual contributions. These depend on salary, paid service and existing pension assets and will be worked out for you by the pension trustee company.

  • The money in my pension was used as a deposit on the properties and mortgaged at a 50% loan to value (LTV) with ICS Dilosk pension mortgage facility.

  • The money was borrowed by the pension trustee company unit trust and not me personally. The mortgage company accessed the loan on the strength, location and rental income of the property to pay back the loan.

  • My only requirement was to confirm that my pension had the other 50% required plus costs and a set level of liquidity (usually 12 months loan repayments plus Trustee fees).

  • The main aim here was cash flow for the future so I have instructed my pension trustee to use any remaining income earned to pay off the mortgage debt as quickly as possible therefore I hope to reduce the pension’s standard 15 year mortgage to just under 10 years.

  • If I manage to achieve this it will save thousands of euro in interest and it will be only possible because the income in the pension structure has no tax liability.

  • It is really important if you go down this route to make sure that in the event of your untimely death that your dependants have access to other liquid assets (either within or outside your pension) to support them as we all know property can take some time to sell and it’s not always the right time to sell.

  • When I retire the pension (including the properties) will be transferred in specie into an Approved Retirement Fund (ARF) and will continue to receive rent tax free throughout my retirement.

  • If my fund is valued at say €800,000 at my retirement date I will also be entitled to draw down 25% of my fund in a tax free lump sum (€200,000) so I will need to make sure I have this in liquid form at this time.

  • The maximum fund size is €2million so if my fund is worth more than the above I can also draw down a further lump sum at 20% tax (max €300,000) that is €200,000 + €300,000 = 25% of €2million.

  • From age 60+ I will be required to drawdown a minimum pension income every year (4% of the value of my fund to age 70 and 5% thereafter) and will pay income tax at whatever rate applies to me in my retirement.

  • It is really important that anybody looking to explore this route gets independent financial advice to make sure that this is something that will work for them as everybody’s circumstances are different. Since I purchased my two properties the rules have changed somewhat and different structures are now required to purchase investment property into a pension. However it is still available and definitely worth exploring if you are looking to buy investment property in a tax efficient manner while also making plans for your retirement.

I feel a lot safer now that I have got the properties to this stage. I firmly believe that in the future when we retire my husband and I will have a standard of living similar to our current standard based on the assets we have accumulated and the pension has been fundamental in balancing the assets and cash flow aspect for our retirement plus our Approved Retirement Fund (ARF) will now play a big part in inheritance planning for our children.

I am happy to help others that want to do the same and share my knowledge and experience in this matter as I feel the more people that ethically invest in their own future while also providing good quality accommodation to the housing market can only be to the benefit of all concerned.

Christina P Buckley.

Property Investor & Consultant.

You can contact Christina at info@christinapbuckley.com or book at https://calendly.com/christinapbuckley/firstcall

PART 1 – Personal Purchase V's Purchase via Pension

NB: This example uses generic figures only. Information in this article is not financial advice. Do your own research, you should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find in this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.

* This was originally published in the IPOA December Newsletter 2021.