Buy-to-Let Pension Purchase
May 12th, 2015
Surveys still show that many people approaching retirement plan to use part of their pension fund to buy buy-to-let property. The Sunday Times cited an example from an accountancy firm on the tax sums. Someone aged 66 cashing in a £250,000 pension would pay £70,000 in tax, and after expenses would have just £170,000 to buy the property with. Assuming a relatively high rental yield, the income would be £7,000 — which compares with one alternative of a rock-solid guaranteed index-linked annuity income of £7,600 a year for life.
People who already own their own homes should beware of concentrating too much of their capital in one type of investment – good returns from property in recent years do not guarantee that returns will be equally good in future