The investment advantage of buying a life annuity.

The life annuity to buy differently

It is really necessary to sweep away all the preconceived ideas on the life annuity. This legal technique of purchase corresponds perfectly to the current needs, to the contemporary stakes. There is no real winner, because the life annuity benefits both the senior sellers and the savers buyers. Like any real estate purchase, the life annuity requires the intervention of a notary to finalize the authentic act.

The calculation of the life annuity
During a purchase in life annuity, you must pay cash a sum called the "bouquet", the day of the signature of the act. The banks having always some reticence to finance this type of operation, it is judicious to have put a little money "aside" to pay the bouquet of departure. Then, it will be necessary to pay the seller a life annuity throughout his life. The sale price is freely determined between the parties. However, it cannot exceed the difference between the market value of the property and the value of the occupied dwelling, determined by the scales, according to various parameters such as the price of the property, the number of days of the year and the number of days of the year.It cannot, however, exceed the difference between the market value of the property and the value of the occupied home, as determined by the scales, depending on various parameters such as the life expectancy of the annuitant or the reversibility of the annuity, for example. Thus, the younger your seller is, the more capital you will have to pay. The bouquet should not exceed 40% of the total value of the estimated property.

The notion of hazard
The life annuity sale has this particularity that it is based on a hazard. It depends on an uncertain factor, namely the life expectancy of the seller. The existence of a hazard is thus an essential and necessary condition of a life annuity sale. The article 1964 of the Civil code defines indeed the life annuity as "a reciprocal agreement whose effects, as for the advantages and the losses, either for all the parts, or for one or several of them, depend on an uncertain event". If there is no uncertainty, the sale may be cancelled by the courts. This will be the case if the seller dies within 20 days of the date of the deed, provided that he is ill on the day of the sale. For a serene life annuity purchase, it is preferable to contact a life annuity professional. In addition to the advice given, he/she will also be liable for up to 5 years after the death of the seller!

Each clause has its importance!

The deed of sale must precisely foresee the distribution of the expenses related to the property. Often, rental repairs are charged to the seller and the property tax to the buyer. Other arrangements can be made by agreement. Your notary will be able to advise you.

The life annuity to optimize its heritage

Dare toinvest in a life annuity property because this investment offers a profitability of 6 to 8% per year on average. You can thus acquire a property at a lower cost, since you benefit from a discount of approximately 30% on the price. This is to compensate for the occupation of the premises (in case of occupied life annuity), until the death of the seller. Everything will depend on the type of life annuity that you are going to make.
With an occupied life annuity, as the debirentier, you will not have to assume the maintenance charges of the property. The free life annuity, on the other hand, offers you the opportunity to rent it to a third person. As a result, you pay the annuity every month, but you also have rents "that come in". It is also possible to make a life annuity, by fixing the duration of the annuity in advance, not to have to pay more than the market value of the house or the apartment.
This patrimonial investment also allows you to acquire a real estate without having to resort to a loan from your bank. By paying an annuity each month to your creditor, you benefit from a purchase "on credit", but without having to pay bank interest.
It is truly an investment of "good father"!

What is the tax treatment of a life annuity purchase ?

The purchase costs are borne by the buyer
When buying a life annuity, it is the buyer who must pay the registration fees calculated on the capital value of the annuity indicated in the deed, as well as on the amount of the bouquet. The transfer duties are the same as for a so-called "classic" sale: the overall rate is 5.80% in most departments.

Property tax and housing tax
In principle, the person liable for the property tax is the owner as of January 1 of the tax year. In the case of an "occupied life annuity with usufruct", it is normally the seller who must pay it. In the case of a free life annuity, the property tax will obviously be paid by the purchaser.
Concerning the housing tax, it is due by the occupant of the dwelling on January 1st. Thus, the person liable for the tax will be:
- the seller in the case of an "occupied" life annuity,
- the buyer in the case of an "unoccupied" life annuity,
- the tenant when the property sold is rented out.

What about the tax on real estate wealth?
The rights of each person are in fact to be declared. This means that the buyer of a property with an "occupied" life annuity must declare the value of the bare ownership of the property for the IFI. on the other hand, if the life annuity is "free", he will have to declare the value of the property purchased and enter the value of the capital representing the annuity as a liability.

Charges also for the purchaser ?

Within the framework of a purchase in life annuity, the distribution of the assumption of responsibility of the work and the current maintenance between the salesman and the purchaser is function of the type of life annuity. In the case of an occupied life annuity with usufruct, the seller is responsible for the repairs and routine maintenance of the property, unless he/she completely vacates the property. He has to take care of the conservation of the property "as a good father of family". On the other hand, major repairs are the responsibility of the buyer. In an occupied life annuity with right of use, the distribution of the payment of the work must be envisaged in the sale act. Finally, in a free life annuity, the current maintenance and all repairs are the responsibility of the buyer of the property.

When you rent a property bought in life annuity

Attention! When you buy a "free" life annuity and you wish to rent the property: the amount of the rent must not be higher than the amount of the annuity (decision of the Court of Cassation of 1982). Otherwise, the courts reserve the right to cancel the life annuity contract.

Stéphanie SWIKLINSKI