With the announcement of the new pensions freedoms, many people have considered the option of taking money out of their pension funds with a view to investing in a buy to let property. I have written a previous article about this here, however Prudential have now created a far more detailed case study on this very topic.
Buy to let property can be a fantastic source of income and capital gains, and can certainly form a part of any well diversified investment portfolio, however the tax consequences may mean that it is less attractive than it seems to use pension funds for this purpose.
The conclusion of this case study is that a very attractive yield of 6% on a buy to let property, could be effectively reduced to as little as 2.7% if the property if funded from a large pension withdrawal.
