Pensions > Independent Trustee Company
Put a roof over
your pension
> Solicitor Fiona Conroy talks to Business Ireland about the
advantages of purchasing property through a pension.
A
key feature of Independent Trustee Company Limited (ITC) selfadministered pension arrangements is the member’s ability to acquire specific property investments. Provided pension rules are satisfied, the member can use their own market knowledge and contacts to access opportunities and potentially enhance their retirement assets.
Purchasing property through a pension Many pension investors have large cash funds available either in their pension or their company that could be contributed to their pension scheme. With interest rates so low, returns are minimal, however according to property website Daft.ie, average rental rates in Ireland have increased by nine per cent in the last year alone. The flexibility of a self-administered pension arrangement means that, provided pension rules are satisfied, the pension investor can choose the property they wish to purchase, either residential or commercial. Where a property is acquired through a pension vehicle, the rental income is not subject to income tax nor will Capital Gains Tax be payable on the sale of the property. Borrowing can be utilised if available and the property fund can also be registered for VAT. On retirement, the property can be transferred in specie to an Approved Retirement Fund (ARF) and can continue to generate income. It can ultimately form part of the ARF holder’s estate on death which means it can be passed on to the ARF holder’s family.
Why self-administered? • Subject to your marginal rate being at the higher rate, income tax relief on employee and employer contributions remains at the higher rate of tax
• All income and gains within pension schemes remain exempt from income tax and capital gains tax* • On retirement, an individual may take 25 per cent of the value of the pension fund as a lump sum, of which a200,000 is tax free • The individual has control over every aspect of their pension affairs including investment and contribution decisions • The individual has access to a broad range of investment types in a transparent, flexible, secure, cost efficient environment *subject to the pensions levy as part of the value of the overall pension scheme
Why ITC? With a view to making property purchases easier, ITC has developed a series of arrangements and procedures, known as Propertyline, to ensure the process is as smooth and as straightforward as possible. The key feature of Propertyline is the comprehensive service through all stages of the purchase. The transaction is handled by ITC which means the pension investor is free to focus on strategy. ITC can facilitate purchases in Ireland and the UK using Propertyline. Purchasing property outside Ireland and the UK can be complicated, however ITC has the knowledge and expertise required to facilitate this. Property purchases are facilitated through ITC’s exempt unit trust structure and a specific sub-fund is established to hold each property. As a result, when borrowing to purchase a property, the other assets of the pension scheme are protected as the bank’s only recourse is the assets of the sub-fund and not the pension itself. Where VAT arises on a purchase, the sub fund can be registered
Fiona Conroy.
Provided pension rules are satisfied, the member can use their own market knowledge and contacts to access opportunities and potentially enhance their retirement assets.”
for VAT without having to register the entire pension fund for VAT. Because ITC’s exempt unit trust structure is used, the property can be transferred to an ARF on retirement without legal fees, Stamp Duty or Capital Gains Tax. With 20 years’ experience, ITC is one of Ireland’s largest providers of selfadministered pension structures. For more information please contact Fiona Conroy on 01 6611022 or email fiona. conroy@independent-trustee.com Independent Trustee Company Limited, as part of the ITC Group, is regulated by the Central Bank of Ireland.
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