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        Updated: April 16, 2024

        Can I transfer my pension into property?

        Can you use your pension to purchase a property? Our comprehensive guide will outline how you can do this.

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        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.

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        The advisors we work with are experts when it comes to property and pensions, and will be able to guide you through the process with the right advice.

        In this article, we’ll explore the common questions about property and pensions, including:

        If you’re still unsure, or want an answer to a specific question, then you can arrange a no-obligation chat with one of the pensions experts we work with.

        Can I transfer my pension into property?

        Yes, you can transfer your pension into property, although there are some exceptions. It all depends on the type of property you are interested in.

        After the Pension Freedom Act was introduced by the government in 2015, many people got the idea that they could withdraw all their pension, without any restrictions and buy a house.

        This is not strictly true.

        Can I buy a house with my pension fund?

        Technically, you can buy residential property with your pension fund, but HMRC will hit you with a hefty taxable bill. This includes buy-to-let properties, which makes this route financially unviable, in the majority of cases.

        Also, buying a house with your pension would mean it would form part of your estate and would be subject to inheritance tax after your death and any investment gains could also be taxed.

        You can use your pension to buy residential property through a Residential Property Fund. But bear in mind that you won’t have control over which properties are invested in and you will also likely be hit with fund management fees and charges.

        With the restrictions on residential property purchases in mind, you may prefer to invest in commercial properties, which come with many tax benefits.

        Speak to an expert today

        Can I transfer my pension into a commercial property?

        Yes, and you could enjoy significant tax benefits if you choose to use your pension to buy a commercial property.

        You could potentially benefit from capital appreciation and rental income, but you’ll avoid having to pay capital gains tax should you decide to sell the property.

        The clincher is that you won’t have to pay tax on any income the property may generate, providing you hold it within your self-invested personal pension (SIPP).

        In fact it’s common practice for a business owner to buy the premises they operate from, so that the business effectively pays the mortgage and allows the pension fund to benefit from the income generated.

        There are a number of investable permitted property types you could own, including:

        • Shops
        • Restaurants
        • Office Blocks
        • Garages
        • Factories

        Everyone is different, so why not take the time to chat with one of the expert pension advisors we work with?

        There’s no obligation to go further and they will be able to offer you valuable advice on the best route to take and help ensure a positive financial outcome. You can arrange a free consultation.

        The pros and cons

        There are a number of pros and cons to using your pension to invest in property, which we’ve included below.

        • Property prices have seen a steady increase in most areas. If this continues, property could outperform other investments.
        • You could get a regular income from your investment without having to wait until you are 55.
        • You could release equity if you need cash in a hurry.
        • You own a physical asset which won’t vanish if the market crashes.
        • There is no guarantee that property prices will continue to rise.
        • You could end up in negative equity if it’s a mortgaged property and prices fall.
        • Buying a property entails a large financial outlay which may not suit everyone.
        • Your capital is tied up and it may be hard to sell quickly for the price you want.
        • You may have to take on some debt to fund the purchase.
        • Repairs and maintenance can be costly.
        • Tenants can be a financial risk.

        Most financial advisors, including the ones we work with, recommend a balanced portfolio of property and investments to spread the risk and maximise returns. You can arrange a quick chat about which are your best options.

        How do I go about transferring a pension into property?

        To begin with, you need to approach your pension provider and discuss your plans with them.

        You need to remember that they will be performing the role of trustee on their behalf and that HMRC imposes very strict guidelines in order to provide the generous tax benefits afforded pensions.

        It is worth noting that purchases must be made through the trust, i.e. on an arm’s-length basis from the beneficial owner of the pension arrangement.

        You should consult an expert about the guidelines and restrictions that apply to different investable property types.

        Can I transfer property to a pension scheme?

        Yes, there are certain advantages in transferring a commercial property into a SIPP or SSAS scheme, as well as a few things you need to be aware of.

        A commercial property owned by you can be transferred into your pension scheme ‘in specie’ (which means transferring ownership to another entity without the need to convert the asset to cash). This saves tax and doesn’t affect your cash flow.

        Be aware that by transferring your commercial property to your SIPP or SSAS, you’re effectively transferring the legal ownership of the property to the pension trustees, who will hold the property in trust for the term of the pension scheme.

        The good news is that the value of your property and income such as rent, will be invested into your pension and fund your retirement.

        There are a number of things to bear in mind, such as:

        • Choosing between a SSAS or SIPP.
        • You may be liable for capital gains tax if the property is sold.
        • Any VAT and tax issues need to be evaluated.
        • Is it better to arrange joint (multiple) ownership of the asset?
        • Who the beneficiary will be if one owner dies.
        • Pension setup charges, fees and ongoing admin charges.
        • If changes to rules on SIPP or SSAS pensions could be risky.

        As always, talk to a pensions expert about your options.

        Should I talk to a pensions expert first?

        For the best financial outcome, it’s always advisable to speak with a pensions expert before you make a final decision. They will be able to provide you with valuable advice based on your personal circumstances. Call us today on 0808 189 0463 or arrange a no-obligation chat with us.

        Ask a quick question

        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.

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        Tony Stevens

        Tony Stevens

        Finance Expert

        About the author

        Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

        Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

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        FCA Disclaimer

        *Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

        Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.