Property v pension

P933alilli

I'm wondering if its worth buying a small property, 150k tops in cash, not far from where I live. I realise there is tax and stamp duty etc so maybe that would be too prohibitive? Or should I keep my small pension and other savings?

k6chris

Collyflower1 wrote: »

I'm wondering if its worth buying a small property, 150k tops in cash, not far from where I live. I realise there is tax and stamp duty etc so maybe that would be too prohibitive? Or should I keep my small pension and other savings?

What are you trying to achieve??

P933alilli

I'm wondering if it will give a better return over a 5-10 yr period than my personal pension. Initially to live in it . I look after my elderly Mum atm but need a break, i'd still be able to give her the care she needs.

Dox

Well, you can't live in a pension, so if your objective is to have your own bolthole that rather answers the question.

Not sure where you get the idea tax is payable. If you are a first time buyer in England or NI, there is no stamp duty payable on homes under £300,000.

MEM62

There are cases where property can be a useful addition when adding diversity to a portfolio but, in almost all cases, it is not a good substitute for a conventional pension.

Property is not a liquid asset and it sits outside a tax wrapper. You also have to work at it as you have to run the 'business'. (Ensuring you have tenants, dealing with maintenance issues, keeping accounts etc) Also, if you prioritise this over a conventional pension you are giving up any contribution made by your employer.

If you do not already own a property you need to look at home ownership as a separate subject to your pension provision.

P933alilli

Thanks, I own our house so it would be a second home. Maybe i'm best sticking to the pension.

atush

Collyflower1 wrote: »

I'm wondering if it will give a better return over a 5-10 yr period than my personal pension. Initially to live in it . I look after my elderly Mum atm but need a break, i'd still be able to give her the care she needs.

Is this cashing in a pension to buy a house? For you to live in? You only get 25% tax free so the rest is taxed. If the pension is 150K now, you'd be paying 40%-45% tax on it?

are you claiming carer's allowance?

coyrls

How old are you? Are you already in receipt of a pension? Did you purchase an annuity or is it a defined benefit scheme? Depending on the answers to these questions, you may well not even have the option of "cashing in" your pension to buy a second house (which is unlikely to be a good idea anyway).

P933alilli

Im 55, I have a small pension and savings.

Dox

Doesn't sound as if buying a second property is viable.

atush

If you already own a home, then cashing in a pension, paying lot of tax on it, to invest in a paroperty that will be highly taxed on income and capital and extra stamp duty, with growing restrictions on allowable expenses- i'd say forget about it.