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Using Property to Save for
Retirement

Many people in the UK might be ‘property rich’ but want or need more than they have saved to enjoy the lifestyle they want. And with more people living longer, there are, on average, more years to fund. Property is often considered as part of retirement planning. This is often through equity release, downsizing or owning buy to let properties.

AdvantagesDisadvantages
• There is a nil-rate band for your main residential property• Mortgage rates are on the increase
• Property values have increased significantly over the years and look set to remain so• You are liable to Capital Gains Tax when you sell any ‘second’ properties
• Repairs and maintenance for Buy to lets is tax deductible• Property will form part of your estate when you die, so there may be an Inheritance Tax (IHT) liability
• You can claim "Replacement Furniture Relief" for Buy-to-lets• Buy to Let mortgage rates and deposits are usually higher than standard residential rates
• Rental returns have increased significantly over the last few years and look set to remain high• Income from a Buy to Let is liable to income tax
• You may experience ‘bad’ or ‘nuisance’ tenants
• Property maintenance and repair costs can be substantial
• You may not be able to quickly access your money if you need to sell your property to release funds
• Downsizing could mean moving away from family and friends