MAKING THE MOST OF YOUR PENSION

A major shake up is on the cards in the complex world of pension legislation.

At the moment, most pension funds are either linked to stocks and shares (which have performed badly over the last 4 years), or commercial properties.

However, from April 2006 is that there will be another option. A Paper is currently progressing through legislation, which will open up residential properties for investment from within your pension scheme.

So, instead of earning low returns on your pension and paying for a mortgage, you can clear your debt, or release the capital to invest elsewhere - taking advantage of a buoyant housing market at home, or the property boom abroad.

This paper, which we have been advised has a 95% chance of becoming law, will allow you to buy a property, or your existing home should you have sufficient funds.

Any income raised from renting/letting a property must go back into your pension fund, and under current legislation, it would do so tax free.

Another substantial benefit is that there would be no Capital Gains to pay for on a property sale held within the pension.

If the property you buy out of your pension is the one you currently reside in, you would have to pay a Benefit In Kind - but it would release capital to buy a dream holiday home or investment.

So why wait?

You could put down 20% on an overseas property and have nothing to pay until completion in 18 months to 2 years time. Thereby reaping the rewards of 2 years capital growth and the knowledge that you have the money to pay outright for the property.

I hate the phrase a win-win situation. But if ever the phrase was coined for a situation, this is it.

For further information, please contact me at carlton@home-away.com, or consult your independent financial advisor.