Property v Pensions

Is it better to invest in Property or pensions? At Oasis Wealth, we understand you will need the full picture to decide what you want. Investing in only property at the expense of a pension could cost you in the future. Contact us to understand more about these investments.

Below is a table that details the differences between Property and pensions:

Pensions

Property

No UK capital gains tax, or income tax to pay on dividends or interest from investments in your pension

You could pay 18% or 28% in capital gains tax on the increase in the value of your property. You have to pay income tax on rental income

Money in the pension is tax free. Tax relief on pension contributions. When you are 55 (57 in 2028) 25% can be withdrawn as a tax-free lump sum, but the rest could be taxed

If your main property is over £500,000 until 1 Jul 2021 and over £250,000 in 1 Oct 2021 you have to pay stamp duty. If you buy more properties, you pay 3% on top of the rates of the main property.

You can choose whether you want regular income or a one-off payment. You can access money from age of 55 (57 in 2028) and could take as much or as little of your pension as you like.

Provided you're able to find a buyer/tenants, you can access money whenever you like. If you sell the property, you could have huge tax bill to pay. If you rent the property, there might be a gap in tenancy or unexpected costs could occur.

Invested in stock market - value of pension can go up as well as down, and is dependent on the performance of the investments. Investments are placed into different assets to help spread the risk. The investor is able to choose what risk or diversification you want.

You are putting all your eggs in one basket. You might not gain a profit by the time you want to sell the property or the rent doesn't cover your expenses. There are different factors that could have a major influence on your wealth e.g tax rules, locations, housing market 

The value of investements and the income they produce can fall as well as rise. You may get back less than you invested. Tax treatment varies according to individual circumstances and is subject to change.

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