AVC payment to reduce tax

Discussion in 'Property investment and tenants' rights' started by Eddie Peters, Feb 19, 2017.

  1. Eddie Peters

    Eddie Peters Frequent Poster

    Posts:
    56
    Just wondering if a lump sum AVC payment can help to reduce a rental income liability. I am working in private sector with a DB pension plan. Honestly, I don't have much confidence in pensions and decided that property investment was a better option. This could be related to a presentation by a pension actuary saying that they didn't expect workers in the 1980s to live so long...
     
  2. aristotle

    aristotle Frequent Poster

    Posts:
    661
    No. Can't be done against rental income unfortunately.
     
  3. Eddie Peters

    Eddie Peters Frequent Poster

    Posts:
    56
    Thanks for the informative reply:)
     
  4. losttheplot

    losttheplot Frequent Poster

    Posts:
    212
    Is there some way you can set the rental property up as part of a self directed pension?
     
  5. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,755
    Last edited: Feb 19, 2017
    It depends on the question you're asking.

    As others have highlighted, pension contributions are not deductible against rental income.

    However, plenty of people prepare their tax return, see that a rental property is throwing up a tax liability of (say) €4,000, and then just make an AVC of €10,000 to "eliminate" the tax liability.

    The AVC is generating tax relief of €4,000 against salary, but the net effect is the elimination of the rental income related tax liability.
     
    Last edited: Feb 19, 2017
    mtk likes this.