An innovative approach
In the complex world of real estate, the viager concept stands out as an innovative solution for diversifying assets or maximizing the profitability of your estate. Life annuities are based on a unique concept: a real estate transaction in which the buyer pays an annuity to the seller until his or her death, often accompanied by an initial capital sum (the bouquet). It's a balancing act in which the unknown, namely the life expectancy of the annuitant, plays the leading role.
The essential contingency
The existence of a contingency is essential in a life annuity sale. This is based on the uncertainty linked to the life expectancy of the seller (the creditor) and, consequently, to the duration of the life annuity payments by the buyer (the debtor). This contingency is an essential condition for the sale to be valid. In its absence, the contract could be requalified as a classic sale or a disguised gift, with different legal and tax implications. The contingency also ensures a balance between the interests of seller and buyer, as each accepts the risk associated with the uncertainty of the seller's longevity, thus forming a fair basis for the transaction.
An opportunity for both buyer and seller
Buying a life annuity is an original way of building up a property portfolio, while enjoying numerous financial and practical advantages.
For the buyer (the debirentier), it means :
- investing gradually over the long term at a reduced price. One of the main advantages is the possibility of becoming an owner at a lower cost, thanks to the discount linked to the seller's occupation of the property (in the case of an occupied life annuity). This mechanism makes it possible to acquire a property at a reduced price, while spreading the investment over several years. After the seller's death, the buyer can choose to occupy the property, rent it out or resell it;
- buy without taking out a conventional mortgage. Payment can be made entirely in the form of an annuity, avoiding the need for a conventional mortgage or a large initial outlay;
- diversify your investment portfolio.
- receive a regular annuity to supplement their income;
- continue to live in the property until death, while receiving the annuity (in the case of an occupied life annuity);
- benefit from tax exemption on part of the life annuity. Exemption varies according to the seller's age;
- avoid the hassle of rental management.
Free, occupied or mixed
Life annuity offers several options:
- the free life annuity is a relatively rare type of life annuity sale, representing around 8% of all transactions. Here, the seller transfers full ownership of the property, with no right of use, habitation or usufruct, meaning that he or she can no longer occupy it. The buyer takes possession of the property as soon as the sale is signed, and can use it as he or she wishes: to live in it, to house relatives or to rent it out;
- the occupied life annuity is the most common option, representing around 70% of all life annuity sales. In this case, the seller continues to live in the property, enjoying a right of use and habitation for life. However, in the event of need (such as a move to a retirement home, or if the home is no longer suitable), the seller can choose to leave and leave the home to the buyer, with an increase in the life annuity provided for in the contract in the event of the seller's early departure;
- the mixed life annuity is a less well-known alternative in which the seller and buyer share the same property. This type of cohabitation generally requires a few adjustments (such as creating a separate entrance, installing individual meters or separating the upstairs from the first floor) to guarantee total independence. The mixed life annuity makes it possible to acquire a property at a lower cost, which is ideal for young people living in areas with high housing demand. For the seller, it provides additional income, reduces expenses and offers a solution to the problem of isolation.