We
have had a number of enquiries from clients about being able
to put their homes or other property into their pension schemes
when the new Pensions Simplification Rules come into force
next April. There are regular articles in the press about
buying a holiday home or a "buy to let" property using
the tax advantages of a pension fund and it all seems such
a good idea.
However
as with most things that seem too good to be true, there
is a minefield of complex conditions attached to the concept.
You
obviously need to have enough money in your pension to
pay for a property. Your pension fund will be able to borrow
money to help with a property purchase but only up to 50%
of it's existing value
( for instance if you have £100,000 already in your pension
then you could borrow up to £50,000 which would then
allow a property valued at £150,000 to be purchased by
your pension ). Clearly unless you already have a substantial
amount in your pension even modestly priced properties
will be out of reach. You will also be obliged to pay
a commercial rent to your pension scheme for the privilege
of living in your home.
Newspaper
articles have suggested that putting the family home into
a pension could protect against Inheritance Tax. This situation
does however highlight a simple example of the possible pitfalls.
Consider if the family home has been put into the husbands
pension and he suddenly dies. As the house belongs
to his pension scheme it would possibly need to be sold
to provide a pension for the widow - it would be possible
for the widow to buy back the family home, provided
she had the funds.
Although
the relevant changes to Pensions law have still to pass through
Parliament we do have a good idea of what will be allowed
under the new regulations. We will be more than pleased to
discuss any ideas that you may have for using your
pension for different types of investment so please
ask us. |
