BETTER IN A BUY-TO-LET?

It is expected that many people may want to empty their pension funds and put the proceeds into one or more residential buy-to-let properties. This may suit many, but there are some factors to take into

account:
• How much tax will have to be paid on the money withdrawn (if in excess of the 25% tax-free sum);

• The amount of Stamp Duty to pay (on properties costing in excess of £125,000);

• The legal fees and other costs to be paid to purchase a property;

• The fact that rental income is potentially liable to tax;

• That there may be Capital Gains Tax to be paid on the eventual sale of the property.

This is not intended to be a statement that no-one should use their pension fund to invest in a Buy-to-Let, but it is meant to ensure that anyone who intends to do so balances the desire to acquire a property with the advantages of keeping the money in a pension (tax free increase in value; ability to pass to beneficiaries free of tax; ability to access income from the pension fund instantly rather than suffering the delays in releasing the value locked up in a property).