WHAT could be more reassuring than knowing that as you tackle that tricky black run, your newly bought chalet is helping to boost your retirement income? From April, new rules will allow investors to place residential property in self-invested personal pensions (Sipps).

As well as having a pension plan with a superb view of the Alps, those who buy a chalet through their Sipp will enjoy the warm feeling of picking up a bargain. The tax breaks offered to investors who put their cash in a Sipp mean that higher-rate taxpayers can cut the cost of buying a property by more than a third. All rental income is tax-free and investors who sell their property need not pay capital gains tax.

A higher-rate taxpayer who pays £200,000 into a Sipp will receive a £56,000 tax rebate from the Government. He or she will also receive a further rebate of £46,000 to offset tax bills, or as a cash sum. So a two-bedroom flat in Villars, Switzerland, costing £300,000 will effectively cost only £200,000.

Those who want to splash out more on a house can borrow through their Sipp but the maximum loan is half the initial sum in the pot. Those who pay in £200,000 would be allowed to borrow half of £256,000 — or £128,000. But investors will only receive these tax breaks on a maximum of £215,000 a year.

If it all sounds too good to be true, that is because it may well be so. Experts warn that buying a property abroad through a Sipp may not suit every investor. Tom McPhail, head of pensions research at Hargreaves Lansdown, an independent financial adviser, says: “The idea of putting a ski chalet in your pension plan may sound seductive but it could become very complicated and expensive.”

The main concern is that many savers will be relying too much on bricks and mortar for their pension income. Justin Modray, of BestInvest, a financial adviser, says: “We suggest that investors do not hold more than 20 per cent of their Sipp in property. So if you are buying a £300,000 house, you should have £1.5 million in the pension plan.”

There are other drawbacks of buying a holiday home through a Sipp. The trustees of your Sipp own the property. If you want to use it you will have to pay the market rent. This could be costly if you want to ski for only a month or two a year, as you will have to pay all year round. Alternatively, the chalet could be let but you will have to book it just like other holidaymakers.

You will also have to pay charges for setting up the purchase. These are likely to be higher than usual because you are buying abroad.

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