April 2006 was going to bring with it changes to the UK pension rules that would enable people to buy residential property, e.g. investment property, holiday homes, etc., with a personal pension.
It was thought that property purchased in this way would not be subject to capital gains tax or tax on rental income.
However the Chancellor, Gordon Brown, decided to u-turn on the proposals.
NOTE: there are still overseas property options available, see the pension links on the right.
Here is a brief summary of the rules as they were proposed:
We suggest that people who are still interested in purchasing overseas property as part of their pension planning contact us to discuss their options. We can also introduce you to independent financial advisors who and give you professional advise on the options that are still open to you.
Half the pension fund value can be used for the purchase.
Contributions are currently limited to a proportion of earnings.
From April 2006 pension contributions can be 100% of earnings up to a maximum £215,000 and a lifetime limit of £1.5million.
Buying a property with a pension fund example:
Deposit required 30%
|Pension fund required||
|50% of fund||
A mortgage can be taken for the balance and the property rented to pay the mortgage.
This is just one simplified example and we urge you to contact us to discuss the details.
It is worth mentioning that the deposit in the above example will buy a detached property outright in some locations; you have a lot of options!
Idea 1: Overseas Property Pension
Idea 2: Overseas Properties Pension
The information on this page is intended as a brief guide only and is not contractual. Clients should get proper professional advice from a qualified pensions and/or tax advisor.
Contact us if you would like to discuss (for free) tax or pension property changes with a qualified advisor, independent from The GPG.
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