Can I Purchase a Property with my ARF?

Can I Purchase a Property with my ARF?

The simple answer is Yes – an ARF can hold or invest in property assets. This form of investment has been gaining traction over the past few years for a number of reasons:

• Over the long term Property is a solid investment asset and
• It provides an annual income

A ARF Fund can invest in almost any type of asset you can reasonably invest in. For example stocks and shares, government bonds, cash, and of course property. In most cases where individuals are invested in property via their ARF it is in the form of a property fund run by a particular insurance company. The property fund may be valued at many hundreds of millions and owns large amounts of commercial property around Ireland.

However an ARF structure can also own an individual piece of property chosen by you.

For example, you identify a piece of property that you think represents a good long term investment and if your ARF is set up correctly your ARF purchases the selected property.

There are Revenue conditions that you must comply with. Such conditions include:

• All rental income from the property is paid into the ARF and not to you
• You cannot benefit from the property whilst it is held by the ARF – for example you cannot use it as a holiday home or private residence for yourself
• You could not make it available as a holiday home for family or friends

Failing to adhere to Revenue rules in this respect can lead to very serious consequences.

On the plus side, rental income from the property paid into the ARF fund is not liable to income tax, PRSI and USC as you are not receiving the rental income – your ARF is receiving the rental income. Remember you are however taxed when you withdraw some of this income from the ARF fund.

Purchasing an individual piece of property may indeed make sense as it is a means to diversify your pension assets for retirement, but it should certainly not be the only asset in your ARF as history has shown that investing in property has the potentially to be costly as well as lucrative.

For more information or if you have any questions, you can call Joanne on 01 5267770 or email jfenelon@arfireland.ie