All about life annuities
Discover the life annuity solution
The term viager comes from the Old French word 'viage', meaning 'time of life'. It is one of the oldest contracts, whose wording and place in the Civil Code (Code Napoléon) have remained unchanged since 1804.
How
life annuities work ?
A life annuity is a real estate sale with the seller, called the 'life annuitant', on one side, and the investor, called the 'debtor annuitant', on the other.
As soon as the deed is signed at the notary, the buyer pays an upfront amount, called the 'bouquet', and then pays the seller a monthly 'annuity' for life. Thus, the seller (life annuitant) continues to live in their home until their death while receiving a sum of money indexed to inflation.
A life annuity is an investment solution that meets the needs of seniors who want to increase their income and improve their daily lives, as well as savers looking for a future-proof investment, without risk.
The main solutions
for buying and selling life annuities
This is the most popular type of life annuity. It represents the majority of transactions. It consists of a bouquet (lump sum payment) and a monthly annuity. It is an interesting option to receive a lump sum and a monthly retirement supplement. An ideal choice for a peaceful retirement and to protect your loved ones.
An occupied life annuity without annuity means that the full price is paid in cash on the day of the deed signing at the notary (deducted from a reduction considered as advance rent, net of rental taxes and without the hassle of property management).
The seller transfers full ownership of the property to the investor. As soon as the deed is signed at the notary, the buyer becomes the owner of the property. The buyer can either live in it or rent it out without waiting for the seller's death. In a freehold life annuity, the buyer must pay an upfront 'bouquet' and a lifetime annuity to the seller. As the new owner, the investor will be responsible for property taxes and related charges.
This is a real estate transaction with a deferred payment. Most commonly, we find the freehold or occupied term sale.
- The freehold term sale consists of a lump sum bouquet and monthly payments. The buyer becomes the owner as soon as the notarial deed is signed. With this investment solution, the seller is no longer the owner or occupant of the property. Therefore, they no longer have any expenses to pay.
- With the occupied term sale, the buyer must pay an upfront bouquet and monthly payments over a fixed period. The seller, on the other hand, benefits from a Lifetime Right of Use and Occupation or for a period defined by the sales contract. They must also pay the ongoing charges related to the property.
- The lump sum bouquet and the monthly payments received by the seller are not taxable under income tax if it is their primary residence or if they have owned the property for 30 years.
In a bare ownership sale, the seller receives the full amount upon signing the notarial deed. This allows them to unlock a significant lump sum and anticipate a future project or proceed with their succession, for example. Through a dismemberment, the seller retains the usufruct of the property. They can live there until their death but will not receive any monthly annuity from the buyer, who becomes the bare owner (they own the property but cannot occupy it or receive income from it).
Dismembering a property allows the investor to acquire it at a reduced price (up to 50% cheaper).
The investor benefits of life annuity property
Real estate life annuity is an investment solution that allows you to build wealth under very attractive financial and tax conditions, with reduced fees. The uniqueness of this real estate transaction is that the investor, with an upfront lump sum payment and a monthly annuity until the seller's death, becomes the owner of the property as soon as the deed is signed at the notary.
The principle of purchasing in life annuity and term sale is vendor financing. The seller takes on the 'bank's role'. Therefore, bank financing is not required.
All these advantages make life annuity investment one of the best risk/return investments on the market, with an average annual return of 7% over the period.
Secure investment benefiting from a particularly advantageous tax framework.
A flexible, profitable investment that allows buyers to build up a property portfolio at their own pace, without having to take out a bank loan.
Socially responsible investment, useful to society and to seniors who can improve their daily lives.
The seller benefits of life annuity property
Selling your property in life annuity allows the seller to improve their retirement and remain in their home with full autonomy. In most cases, the seller chooses the option of an occupied life annuity and retains the usufruct of their property until their death. The financial contribution of the investor, between the lump sum and the monthly annuity, allows the seller to age in improved financial comfort.
Furthermore, expenses related to the property, such as property taxes or the cost of repairs, are now the responsibility of the new owner. This allows the seller to save money in addition to the annuity they receive.
The life annuity can also be part of a wealth management strategy, for example, to anticipate one's succession. It is possible to pass on the lump sum to heirs with reduced inheritance taxes.
Real estate transaction that allows you to continue living in your home independently.
Investment solution that helps increase your income and reduce your expenses.
Selling in life annuity facilitates succession and the transfer of your real estate assets.
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