Life Annuity

Here is the essential on the life annuity and much more. There are multiple forms of life annuities and property dismemberments.

Our team at Victorine Immobilier is here to answer your questions.

The principle of the occupied life annuity is to sell one’s property while continuing to live there and thus remain in one’s home. You are then relieved of all the charges that are required by an owner, such as for example, the payment of property tax, repairs of major works (repair of a roof, a facade, etc). You have the right to stay in your home as long as you wish. This is called the right of use and habitation.

When you sell your property, it is estimated by a real estate expert. The value of your property will take into account all the classic characteristics of a sale: the surface, the condition, the location, the floor, the noise, the parking, the street, whether there is an elevator or not, the distribution of the rooms, the demand on your market. In short, all the criteria that allow you to evaluate the intrinsic value of your property. This is what we call the market value of the property. This house will not be available to the buyer because you will have the right to use and live in it, (which is personal) and you will therefore be able to live there as you wish. The buyer will not be able to make personal use of it. He will not be able to live in it, nor to rent it. He will be able to benefit from this house only when it is free, without knowing when. This is called a contingency. Nobody knows when the buyer will be able to enjoy the property he has bought: neither the seller, nor the buyer, nor the intermediary. No one knows.

This risk prevents the purchaser from using a property that he has bought.

The property will then suffer a discount depending on the age of the person(s) who benefits from the right of use and habitation. The buyer will pay to the seller: a lump sum: a sum, a capital paid in one go (as in a classic sale) which is without any taxation an annuity: a sum which will be paid to the beneficiary (ies) each month until the end of their life. This annuity, which represents a source of income, is tax free (another advantage!) a more important bouquet and no annuity: it is then a life annuity without annuity. The bouquet and the annuity are calculated according to the value of the property and the life expectancy of the beneficiaries. In legal terms, one will speak about debit annuity for the one who pays the annuity and credit annuity for the one who receives it.

Yes, they are. They follow a specific index that will be indicated in the sales contract. The index must be directly related to its use. For example, if the sale is of commercial premises for a chartered accountant, the index of commercial rents will be the reference index. We will see later that the sale of commercial premises in life annuity is very advantageous for both the sellers and the buyers.

You will receive a tax-free lump sum. So for example, from the age of 70, you will only be taxed on 30% of the income and no longer on 100% of the income. You will not have to carry out any important work such as roofing or retaining walls. The small works which you benefit from daily and which are related to your dwelling remain with your load, as it is the case currently You do not manage any more the problems related to the syndicate. You will not have any more real estate tax to pay

If you leave your home sold in life annuity, that you give up your right of use and dwelling. You will have to inform the the purchaser by registered letter with acknowledgement of reception with a 3 months notice. Attention, this abandonment of the right of use and dwelling is irrevocable. The annuity will then be revalued according to the terms of the contract.

The free life annuity is a property sold with generally a bouquet and an annuity but the salesman does not use the property: neither in principal residence nor in secondary residence. It is either a property free of any occupation or a rented property. Once sold, the one who sells in life annuity will not be any more owner. This implies that he will no longer be liable for any property tax or condominium fees. He will not have to manage the tenant, the rental vacancies, the possible unpaid bills and all the worries related to the renting. You will then receive an income more important than the rent if it is rented or than the rental value if it is free of any occupation.

If you wish to continue to benefit from this property, then it will be considered as an occupied life annuity because the purchaser will not be able to dispose of it freely. On the other hand, if there is no right of use and dwelling and that the the purchaser can rent or occupy it, then it is a free life annuity sale.

This is a free life annuity sale. The seller, not being any more owner will not perceive any more the rents. On the other hand, the annuity cannot be lower than the amount of the rent. In addition, your income from the annuity will be tax-free depending on your age. Beyond the age of 70, only 30% of your income is taxed. 

Yes, you will receive a tax-free lump sum. You will receive an annuity that is larger than your rent. On this annuity you will only be taxed on 30% of the income and not on 100% of the income. You will no longer have to deal with problems related to the property manager You will no longer have to deal with problems related to unpaid rent or other problems related to renting. You will not have any work to do and …. No more property taxes to pay.

Maybe you will wonder if a buyer will be interested in this quasi-miraculous transaction! It is an excellent transition!

It’s a win-win transaction. Sometimes our buyers are uncomfortable with the idea of life annuity when they are doing a great service to our seniors who need it. As in any transaction of any kind, a seller is looking for a buyer. The purchasers provide a service and meet a need. The life annuity is a social and solidarity act. It allows sellers (credit-annuitants) to improve their living conditions and to fully enjoy their retirement. For you, buyers, the advantages are multiple.

– The registration fees (commonly called “notary fees”) are calculated on the occupancy value of the property (with a discount linked to the seller’s right of use and occupation). – The discount corresponds to the equivalent of 10, 15 or 20 years of rent. It is therefore a significant sum on which you will not have to pay taxes since there is no increase in income. You receive them as a discount! Thus, no CSG, no income tax…. – This occupation value is also an amount on which there will be no real estate loan and thus no credit cost. – The small works related to the occupation of the apartment are not at your expense but at the expense of the person(s) who occupies(s) the apartment. – The occupant, if it is the salesman, generally takes care of the habitat. You can be serene. – There are no worries about managing tenants.

Yes, absolutely. At the time of the resale, the calculations are made at the time of the sale with the new data: Market value and age of the occupants are updated. The purchaser can resell in free life annuity a property whose occupants decided to give up their right of use and dwelling or sell in Full Ownership (if and only if it is envisaged in the notarial act in this last case). If you buy or sell a life annuity, take a specialist in life annuity. Many clauses such as this one can be forgotten if you take an agency which is not expert in the field of the life annuity. See the Contact tab.

Within the framework of a life annuity, the apartment cannot be rented by the annuitant, i.e. by the one who sold. Indeed, the day of the sale, you have the enjoyment of the good with a right of use and dwelling which is personal to you but you are not any longer owner. You cannot rent a property that does not belong to you. Other formulas exist and may be suitable such as the sale in bare ownership but not the life annuity. Contact us so that we can study the best solution. Once again, contact a specialist in life annuity and dismemberment. Multiple subtleties must be mastered to bring you the best solution to your need. See the Contact tab Life expectancy: how is it calculated? So here is a concept much more complicated than it seems. Life expectancies evolve and especially, it is necessary to differentiate the life expectancy at birth and the life expectancy at the time of the life study. Thus, everyone does not use the same tables of calculations… Victorine Immobilier and 95Bis Viager make an average of three different tables in order to have a calculation with the most just and the most balanced possible (always with this hazard….)

Contact your insurance company and inform them of the change. This does not usually result in additional costs, but it is important that your contract is in line with your situation. This will avoid possible difficulties in the event of a claim.

– In the case of an occupied life annuity, the fees are calculated on the basis of the value of the property minus the right of use and dwelling – In the case of an unoccupied life annuity, the fees are calculated on the basis of the market value of the property (as in the case of a property purchased in the traditional way) – In the case of a term sale, the fees are calculated on the basis of the capital and the totality of the annuities provided for – Please note that the acquisition fees (or notary’s fees) are paid by the purchaser

There is not a single strict method.we must first distinguish the free life annuity and the occupied life annuity.the occupied life annuity will see itself allotting a discount of the fact that the person who sells occupies the apartment. This discount is logical because the purchaser buys a good which he will not be able to have. The calculation takes into account the statistical scale of life expectancy. There are several scales: those of the INSEE, the DAUBRY table, the tax table used by notaries… The calculation takes into account the age of the person or persons. The calculation takes into account the rental value of the property, the rate of return and the market value of the property. We proceed to different methods of calculation and make an average so that none of the parties is favored or disadvantaged.

There are many benefits to selling a life annuity to your children. Here are some of them:- The most obvious benefit is the increase in your quality of life due to a lifetime annuity and the collection of a lump sum. You can then fully enjoy your retirement. The sale in life annuity makes it possible to finance the leisures and to improve its framework of life. The fulfilment of one’s parents is often reassuring for the children. – The financing of a potential future dependence. It allows the elderly to stay as long as possible in their home with, for example, a home help and allows them to age better. The additional income can, for example, finance a stairlift or make modifications to a car for a person with reduced mobility – The bouquet obtained by the life annuity sale can also allow you to make donations and thus prepare your estate. The inheritance fees being high (and sometimes not financeable by the heirs), you allow them to benefit from an immediate financial aid.a collective reflection with your children and our team is proposed.For that, we will never repeat it enough, make you advise by a professional of the life annuity. See the tab Contact Of course, the life annuity does not answer all the problems but can be a real family solution to consider.

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