A brief guide to buying property with Irish pension assets.

1. Buying Property in Your Pension
Shane Brennan
Chartered Financial Solutions
May 2018
Chartered Financial Solutions Ltd is regulated by the Central Bank of Ireland.

2. Property within your Pension
∗ As the strong economic recovery continues, property
is back in vogue.
∗ We are regularly asked by our clients if they can
acquire a specific property within their pension.
∗ The answer is generally yes, with some caveats.
∗ This presentation will explore the process further.

3. ∗ You identify the property you wish to buy.
∗ Your pension fund buys the property.
∗ Acquisition costs are met from pension assets.
∗ Rent flows into the pension account tax free.
∗ Ongoing maintenance costs are met from the fund.
∗ On ultimate disposal, the proceeds are also tax free
within the pension structure.
The Concept - Summarised

4. ∗ Control – you decide what you want to buy.
∗ Tax efficient:
∗ no income tax on rental income.
∗ no Capital Gains Tax on sale of property.
∗ ongoing maintenance costs are met from gross pension
funds, rather than net salary.
∗ The property can pass into a post-retirement
structure in due course.
The Benefits

5. ∗ Lack of diversification – many clients wish to use the
vast majority of their pension fund to buy a single
asset. This is not prudent diversification.
∗ Liquidity – property can be an illiquid asset in a falling
market.
∗ The “Irish Issue” – we are more than a little obsessed
with property, which has clouded our judgement in
the past!
The Key Risks

6. Typical Client Profile
Owner Directors
Senior Employees
Self-Employed

7. Mainly residential or commercial
units in Ireland and the UK.
Further afield – on a case by case
basis.
Typical Property Profile

8. ∗ Holiday homes are strictly forbidden.
∗ Arm’s length – you cannot be connected to the
property in any way (don’t even ask!).
∗ You, or any connected party, cannot use the property.
∗ Property must be let on commercial terms to a non-
connected party.
∗ There must be sufficient liquidity to discharge all
scheme fees and liabilities.
∗ Development & quick resale is not allowed.
Revenue Rules

9. Some banks are now making facilities available.
Max loan to value is 50%.
Max loan term is 15 years.
Loan must be on an interest & capital basis.
Current rates are expensive – circa 5.6%.
Borrowings

10. 1. Gather up existing pension assets into approved
structure.
2. Identify the property you wish to buy.
3. Any borrowings are arranged.
4. Pension fund acquires the asset; legals & insurance
cover arranged.
5. Property manager appointed if needed.
6. Rental income flows in.
The Steps Involved

11. ∗ In the right circumstances, this is an attractive
proposition.
∗ Don’t put all your eggs in one basket!
∗ Like any asset, property goes through peaks &
troughs, and can be illiquid at times.
∗ We are happy to assist you to further explore
your options.
Summary

12. Chartered Financial Solutions Ltd
Trinity House
Charleston Road
Ranelagh
Dublin 6
Ireland
T: 353 (1) 497 2133
E: info@cfsireland.com
W: www.cfsireland.com
Chartered Financial Solutions Ltd is regulated by the Central Bank of Ireland.

13. Revenue rules which have underpinned our advice are open to change.
Past performance may not be a reliable guide to the future
performance of your investment.
The value of your investment may go down as well as up & you may
get back less than you invest.
While great care has been taken in its preparation, this presentation is of a
general nature and should not be relied on in relation to a specific issue
without taking appropriate financial, insurance, investment or other
professional advice.
The content of this presentation is for information purposes only and does not
constitute an offer or recommendation to buy or sell any investment or to
subscribe to any investment management or advisory service.
Compliance & Risk Notes