With strong rental demand, it is easy to see why more and more professionals are considering property as part of their pension portfolio. You may have a Personal Retirement Savings Account (PRSA), be part of a Small Self-Administered Scheme (SSAS) or retire with an Approved Retirement Fund (ARF) so property may be the right investment for you.

Once you have established the budget (this will vary between schemes) you can begin looking at the market. We do highly recommend you ask the seller what the most recent rent was and when this was set. The Rent Pressure Zone rules will limit how much rent can be increased by if the property has been let at any point in the last two years. An otherwise amazing apartment may well be unsuitable as an investment if it comes with a lower yield.

There will of course be some costs to factor in – Solicitor Fees, Stamp Duty, Insurance, Local Property Tax and Letting Agent Fees. Don’t forget the Property must be at “arms length” so you cannot purchase the property from anyone you have a connection with nor can you rent it to them either.

Don’t forget to budget for some work on your new property, at minimum it will likely need some minor work to ensure compliance with current rental regulations. Our experienced agents at Bespoke have plenty of experience advising clients and would be delighted to both let and manage your property.

4 types of pensions that are eligible to purchase property:

  1. Approved Retirement Fund (ARF) – taken out on retirement – also can’t use a loan alongside. Need to withhold some liquidity (often around 5%-10%)
  2. Small Self-Administered Schemes (SSAS) – pension scheme with (usually) 12 or fewer members
  3. Personal Retirement Savings Accounts (PRSAs) – usually through a pension provider
  4. Buy-Out-Bonds/Personal Retirement Bonds – option to purchase pension fund should you leave your company pension scheme

  • Must be “arm’s length so no one connected with the owner can use the property – so can’t rent to a family member or employee & can’t buy off them either
  • Can’t purchase to develop and resell.

EU Directive – IORP II came into Irish Law – means that on any new invention selections no more than 50% can be invested in property (so can’t put entire pension into an apartment) on occupational or company pension schemes (so not relevant for ARFs or PRSAs).

Main Benefits (basically tax benefits):

  • no income tax on rent received within the fund (all rental income is ring-fenced within the pension fund)
  • no capital gains tax if selling the investment property
  • maintenance cost can be funded through pension

Sources

https://pensionsupportline.ie/using-your-pension-fund-to-buy-property/#restrictions – overview of using your pension fund to buy property 

https://www.irishexaminer.com/lifestyle/people/arid-40756488.html – some extra info

https://www.davy.ie/market-and-insights/insights/financial-planning-insights/2019/reasons-to-consider-investing-your-pension-in-property.html – some extra info