The basic principle
It is a question of acquiring a property by paying a so-called life annuity to the seller until his death instead of paying off a mortgage or paying the full value of the property. Life annuities come in two distinct forms: the life annuity and the free life annuity.
Why to sell in life annuity
When the income of a senior or a couple of retired owners is not enough to cover all their needs, the sale in life can be an interesting solution. This type of transaction is particularly suitable for homeowners who do not have heirs who can take over the housing.
Why to buy in life
In principle, a purchase in life can acquire a property at a price sometimes lower than the real value of the property. It may also happen that the acquisition is more expensive than expected if the seller reaches an age well above the average life expectancy. It is both the peculiarity and the risk of the life. It must also be remembered that during a life annuity transaction, the buyer will receive a deduction called the occupancy allowance.
How to calculate a life annuity
The calculation of a life annuity is based on three elements: the value of the property sold, the age of the seller and the bouquet paid by the buyer. This "bouquet" is the sum paid by the buyer at the time of the sale. It is set by agreement between seller (or annuitant) and buyer (débirentier) and represents on average 30% of the price of the property. The remaining balance is the life annuity.
Life expectancy tables based on average life expectancy are used as the basis for calculating this life annuity and give an estimate of the duration of its payment.
In the case of a "life annuity", the purchaser will deduct from the annuity of the remainder to pay an occupancy allowance equivalent to the rent that would pay a tenant occupying the house or apartment.
The life annuity
The amount of a life annuity will depend on the value of the property sold after deduction of the bouquet, the estimated life of the seller and the choice of a life annuity free or occupied. The buyer will pay the seller ad vitam. As part of a busy life, he will take possession of the premises at the seller's death.
The busy life annuity
The seller hands over his property while continuing to occupy it and receiving a life annuity. In the context of a life annuity occupied, it will ensure the current maintenance of the property and will have to pay the related expenses. However, the important work and property tax will be paid by the buyer. The occupancy allowance deducted from the life annuity paid by the purchaser increases the profitability of the investment.
The free life annuity
In this case, the seller is no longer the owner and no longer occupies the dwelling but receives a supplementary annuity to his income. The property sold as a life annuity is available to the purchaser upon signature of the contract. He chooses to live there or rent it without resorting to a financial institution.
A specialized expert department, Barnes Viager provides its clients, sellers and buyers with personalized support based on its legal expertise in life and wealth strategies.
The real estate expertise of Barnes makes it possible to offer in life exceptional properties, ideally located, suitable for sellers wishing to optimize their real estate capital and buyers seeking a profitable investment heritage.