Turkish Living Forums - View Single Post - Turkish property in your Pension fund?

Mustaq,

This was in the newspapers more than a year ago now, I telephoned an adviser but the rules were not clear................................

For the first time, you will be able to include property investments in your pension portfolio - something that will bring a sparkle to the eyes of anyone planning to buy a holiday home abroad or who invests in buy-to-let properties.

You will even be able to borrow to buy the property, provided you are able to invest twice what you borrow from your own resources. And you can claim tax relief on the lot.

It will work like this. You invest £100,000 pounds into a self-invested personal pension (Sipp), perhaps over a few years, or in one go, by switching existing pension savings into the plan. This attracts all the usual tax reliefs. You can then borrow £50,000 and buy that dream villa for £150,000. If you rent it out, there will be no income tax - and no capital gains tax to pay when you sell.

People in company schemes will be allowed to open a self-invested pension as well. Similarly, if you already own a property, that can be switched into your Sipp. Bear in mind that the plan will be buying the property from you, so it must hold sufficient funds to do so. However, it will be possible to switch in this money on the same day.

A property-based fund will be subject to normal pension rules, including the requirement to buy an annuity by the age of 75 with at least 75 per cent of the fund.

According to Stewart Ritchie, the pensions director at Aegon: "The Government knows it is failing to encourage people to save. But it is also aware of Britain's love affair with property. So I suppose their thinking is: if we can't get people to buy a pension, let's try getting them to buy a house."

Along with other commentators, Ritchie is concerned about the dangers of encouraging the workforce to put all its eggs in one basket by making it easier to hold almost all their wealth in property.

Scott Moore of BDO Stoy Hayward says: "On the face of it, the opportunity to invest £200,000 in residential property and receive tax relief of £80,000 is immediately appealing. However, property prices are believed to be inflated in many areas of the UK. An investor who has lost money on shares over the past three years' markets could find themselves switching into property at exactly the wrong moment."

copyright daily telegraph

22nd June 2005, 19:00	#2
Rimms Senior Member	Mustaq, This was in the newspapers more than a year ago now, I telephoned an adviser but the rules were not clear................................ For the first time, you will be able to include property investments in your pension portfolio - something that will bring a sparkle to the eyes of anyone planning to buy a holiday home abroad or who invests in buy-to-let properties. You will even be able to borrow to buy the property, provided you are able to invest twice what you borrow from your own resources. And you can claim tax relief on the lot. It will work like this. You invest £100,000 pounds into a self-invested personal pension (Sipp), perhaps over a few years, or in one go, by switching existing pension savings into the plan. This attracts all the usual tax reliefs. You can then borrow £50,000 and buy that dream villa for £150,000. If you rent it out, there will be no income tax - and no capital gains tax to pay when you sell. People in company schemes will be allowed to open a self-invested pension as well. Similarly, if you already own a property, that can be switched into your Sipp. Bear in mind that the plan will be buying the property from you, so it must hold sufficient funds to do so. However, it will be possible to switch in this money on the same day. A property-based fund will be subject to normal pension rules, including the requirement to buy an annuity by the age of 75 with at least 75 per cent of the fund. According to Stewart Ritchie, the pensions director at Aegon: "The Government knows it is failing to encourage people to save. But it is also aware of Britain's love affair with property. So I suppose their thinking is: if we can't get people to buy a pension, let's try getting them to buy a house." Along with other commentators, Ritchie is concerned about the dangers of encouraging the workforce to put all its eggs in one basket by making it easier to hold almost all their wealth in property. Scott Moore of BDO Stoy Hayward says: "On the face of it, the opportunity to invest £200,000 in residential property and receive tax relief of £80,000 is immediately appealing. However, property prices are believed to be inflated in many areas of the UK. An investor who has lost money on shares over the past three years' markets could find themselves switching into property at exactly the wrong moment." copyright daily telegraph

Sponsored Links