Hopefully I have the correct board.
I'd like to understand the general principles of owning residential property in a pension fund.
To help me understand the various issues connected with this I have set myself a theoretical analogy.
For the last three years I have been working through a financial recovery plan whilst at the same time hoping my mental and physical health remain robust. I haven't done too well with my health over prolonged periods before this. That aside I've been back at work for four years now and will be in a position to commence operation "ave it" in the next six months. The three previous operations "hope", "oh yes" and "now we're cooking with gas" all went well and I am good to go for the final stage.
I am not in any rush to buy stuff for my pension. I'd like to have a bit more understanding of options first.
Example of House Purchase
House costs £100K
Rental income £6K pa.
No purchase tax (below £125K)
- Option 1. Purchase house with no lending facilities - what happens to the rental income? Can it be put into a stocks pension without being taxed? - a sort of rollover investment
- Option 2. Purchase house with 75% LTV loan - pay off loan through rental income and additional monthly "pension" contributions(these being from personal income, do they attract tax rebates for higher rate tax band at 40%? Approximate value (including tax rebates of income available for this is £20K + £6K rent))
AiY