Property through your pension

In recent years the popularity of purchasing property through pension funds (pre and post retirement) has increased steadily. However there are a number of attractions, benefits and limitations that need to be considered.

There are a number of tax advantages to investing in property through a pension scheme. Any rental income earned from property is exempt from income tax (as long as the scheme has been approved by Revenue as a tax exempt one). Similarly, any profit earned from the sale of properties is exempt from CGT. Furthermore, you can get pensions tax relief on your pension contributions into the scheme.

Although self-administered pension schemes have traditionally been opened by company directors and the self-employed, it may be possible for you to set up such a scheme if you are an employee with a company pension.

All investment income and gains are tax exempt within the pension structure. This makes your pension fund the ideal place to purchase property.

Property as an Asset Class

  • You can pick the property you wish to purchase – residential, commercial and/or land
  • Borrowing is allowed but if finance cannot be sourced we have facilitated joint purchases being used to finance transactions
  • Appoint a solicitor who can act for you in the property purchase
  • All rents must be paid directly into the pension scheme bank account and expenses are paid from the same account

Benefits of property through your pension

  • Pension tax Exemption: Rental Income Payable to fund is tax free
  • If sold in the pension, no capital gains tax payable at 33%
  • Tax relief on original contributions at 12.5% or up to 40%
  • All investment income and gains are tax exempt within the pension structure. This make your pension fund the ideal place to purchase property
  • You have control over every aspect of your pension

Restrictions in buying a property through your pension

  • The seller must not be related to you, your employer, its directors and associated companies
  • The property cannot be sold or let to relatives, your employer or its directors and associated companies
  • Personal use of the property is prohibited
  • ·The development of a property with a view to its disposal is not allowed


  • All pension contracts excluding A(M)RF can borrow
  • Borrowing is restrictive in certain areas
  • Maximum term is 15 years
  • Non-recourse lending
  • In our experience, Bank of Ireland and Ulster Bank are lending on commercial property
  • Dilosk and Ulster Bank are lending on residential property



Advantages of investing pension in property



  • Generous tax reliefs on funds to purchase property
  • All purchase costs are met by the pension
  • Rental income is exempt from income tax, PRSI and USC
  • There is no Capital Gains Tax on the sale of the property
  • You can transfer the property in specie in to your Approved Retirement Fund (ARF) at retirement



Disadvantages of investing pension in property.

  • You cannot use the property – it must be for investment only
  • Risk – gearing significantly increases the risk profile of the investment
  • It is an illiquid asset


In Summary

  • The self-invested market is growing rapidly as consumers seek returns and become more investment conscious
  • Self-invested structures are not just about property, they are the only structure that allow individual true investment choice and control
  • Fee structures across all services and products are extremely competitive
  • The uptake of self-invested pension by company directors and professionals in the UK is substantial and Ireland is now firmly following this trend

If you have any queries please don’t hesitate to contact Gallivan Financial today.

Take care,

The Team at Gallivan Financial

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