Pension Fund
Mortgage

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What is a Pension Fund Mortgage?

  • A pension fund mortgage allows you to buy a property through your pension fund. This plan can be an extremely profitable option for Irish pension holders. As all income and gains within pension schemes are exempt from income tax and capital gains tax, both rental income and profits from sale of the property will not be subject to these taxes.
  • With a pension fund mortgage you can choose the property yourself and can borrow up to €500,000 subject to a maximum mortgage of 50% of the value of the property.
  • Under Revenue rules, a property management company will manage the property on your behalf, this means you can have very little involvement with the property if you so wish.

1. You can choose the property

  • As you can choose the property you wish to purchase you can use your own market knowledge and contacts to assess unique opportunities. You can also choose to acquire residential or commercial property.

2. You will pay no income tax

  • If you owned the property yourself you may be subject to income tax on rent earned, but with a pension mortgage you will pay no income tax.

3. No capital gains tax

  • Likewise, if you owned the property and sold it, you would have to pay capital gains tax on the sale, this is not the case for pension mortgages.

4. Control over all aspects

  • You have control over all aspects of your pension affairs including all investment and contribution decisions.

5. Other assets are protected

  • When borrowing to purchase a property, the other assets of the pension scheme are protected as the bank’s only recourse is to the assets of the sub-fund and not to the pension itself.

6. Must not be a Connected party

  • You cannot have owned the property or be a connected party to the owner of the property prior to purchase under revenue rules. The property cannot be rented to a connected party.

Get in Touch

Contact one of our local Financial Advisors on 1890 300 303 to discuss your options. Alternatively, request a call back and one of our Advisors will be in touch.

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Important Assumptions

For the purpose of determining the term over which pension contributions are made, we have assumed your birthday was exactly six months ago.

If your target retirement age is lower than the age at which the Social Welfare pension commences (age 68 if you are born on/after 01/01/1961, age 67 if born before this date but on/after 01/01/1955 and age 66 if born before 01/01/1955) the calculations allow for funding for this gap, in addition to the cost of the annuity.

You are entitled to a full Social Welfare pension of €248.30 per week as at March 2019 which is assumed to increase by 2.5% per year.

You are saving for the difference between the Social Welfare pension and your target monthly income in retirement.

We have allowed for inflation of your target monthly income of 2.5% per annum between now and your retirement date.

Any other private pension provision you may have in place has not been taken into account.

Your monthly pension contribution increases by 2.5% each year up until your retirement age and is invested in a pension plan with an annual management charge of 1% and a 5% charge on each contribution, in line with the Standard PRSA fees and charges maximum limit.

A Gross Investment Return of 4.2% per annum on your savings. This is not a forecast because the value of your investment may grow at a faster or slower rate than assumed and the value of your investment may be expected to fall from time to time as well as rise.

On retirement you purchase an annuity which escalates at 1.5% each year, has a 5-year guarantee and is payable monthly in advance. The annuity rate assumes a post retirement interest rate of 2% per annum and no spouse’s pension. The actual annuity rate will depend on the selection of dependant’s pension, guaranteed period and the escalation rate, as well as interest rates prevailing when the annuity is purchased.

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