A property as a pension?

mharries1

Some 20+ years ago I bought a property (additional to my main home) as future security and in place of a private pension. The property has a value of around 150-170k and provides an income of £500pcm (all declared and above board).
My wife has had to retire due to ill health and has been receiving contributions based esa which has now come to an end. It appears as though she will not be able to claim any income based benefit due to this second property. Is it possible to transfer this asset into some kind of pension in order to formalise my intention.
I am a self employed low earner having just retrained. I am 54. My wife's condition means that we may have to sell both our main home and this second property in order to buy somewhere with easier access.
I have had poor experiences with accountants and ifa's
Thank you for reading.

lisyloo

It appears as though she will not be able to claim any income based benefit due to this second property.

Can you clarify - is this due to the asset value, or due to the income from the property?

dunstonh

Is it possible to transfer this asset into some kind of pension in order to formalise my intention.

No.
1 - you cannot transfer property into pension
2 - it would be deprivation of assets on the means test.

I have had poor experiences with accountants and ifa's

How? Accountants had mostly pulled out of advice by 1995. So, you wouldnt use them anyway. IFAs only existed after 1988 and if you bought the property 20+ years ago as retirement provision, that doesnt give much window for you to use one. Back then, most consumers didnt use an IFA. They used insurance agents/tied agents. It in only interesting to know as an IFA would likely have recommended income protection (something that would have been useful) and would have recommended a pension (again useful as pensions would not be included in that means test at 54).

atush

So, your second home is 150-170K and gives you an income of between 3-4%. Not very good esp as you pay tax on it.

Not being in a pension, it leaves you open to means testing- pensions don't.

Third, where do you live that a bungalow would cost enough you have to sell both?

the left over capital from doing so, would also prevent you from receiving benefits as you will probably be over savings limits? No you would not be able to transfer this to a pension, as you cannot hold residential property in a pension. But if you sold it/them you could put some of the left over capital into a pension.

forth, what kind of pension have you got? Have you made 35 years of NI contribs?

mharries1

Thanks for super quick replies even if not what I wanted to hear!!
Lisyloo - asset value. Income is classed as mine for tax purposes but last tax year I was still below the tax threshold.
Dunstonh - thanks for being so concise! My poor experiences are not relevant but are the reason why I decided to provide for myself. When I left school I worked for a Merchant Bank before becoming disillusioned by the whole system and moved to the westcountry to leave that life behind. To be completely correct I have not had a poor experience of an ifa as I have not used one, however the ethos of our banks investment department was not as customer focused as I naively expected. I got out.

lisyloo

Sorry again if it's not what you want to hear, but you cannot deliberately deprive yourself of assets to gain benefits.
That's not a judgmental term on my part - it's called "deliberate deprivation" and I mention that so that you can research it further.

Sorry to hear of your situation.

mystic_trev

If you sell both Properties you'll almost certainly have to pay CGT on the second one.

As has already been said, you've got to be very careful how you proceed, as it looks like you're trying to act in a way that would be seen to be 'deprivation of assets'

You really do need to consult an Accountant.

dunstonh

To be completely correct I have not had a poor experience of an ifa as I have not used one, however the ethos of our banks investment department was not as customer focused as I naively expected. I got out.

Best not to say you have had a bad experience when you have not. You cannot compare banks investment departments with IFAs. Worlds apart. Merchant banking even more so.

It was mainly a point of interest on my part as to know why but given your poor situation now suffering issues that an IFA would normally have advised on, I wanted to know if that was part of the issue.

Thanks for super quick replies even if not what I wanted to hear!!

Plus, you have capital gains tax bill on the buy to let when you sell that too. Something else to budget for.

atush

I am hoping we crossed posts as to why you didn't answer any of my questions.

But do know some of today's difficulties may be a direct result of your own misinformed financial prejudice against independant (very important this word as you confused it with tied/dependant) advice.

Basically, investing as you have has resulted in, loss of tax relief (ie you paid more tax than you need have), a CGT gain that is taxable (need not have been if you had shared it with your OH and had 2 cgt allowances), and lost benefits as you didn't structure all this properly as pension incomecapital would not be taken into acct for benefits.

Thrugelmir

mharries1 wrote: »

The property has a value of around 150-170k and provides an income of £500pcm

That's a poor return for the amount invested.

atush

I agree, mentioned in post 4

3-4% isn't impressive if not even taking into acct costs, fees and taxes (lets not mention maintenance and voids)