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02 June 2021

Life annuity sale

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The life annuity sale, although not very widespread, has advantages for both the seller and the buyer. In Luxembourg, this type of contract is starting to become more popular. We explain everything there is to know about the life annuity sale.

What is the life annuity sale?

The life annuity sale is a contract by which the owner, called an annuitant, sells real estate to a purchaser, called a debtor, in exchange for a life annuity . This lifetime income can be made per month, per quarter or per year and can be accompanied by a bouquet , that is to say a sum of money discussed between the two parties paid at the time of signing the contract.

There are two types of life annuity contracts:

  • Theoccupied life annuity: the seller retains his right of use and habitation or his usufruct until his death.
  • The free life annuity : the seller must leave the property and the buyer can live there or take possession of it immediately after the deed of sale.

Advantages of the life annuity sale

For the seller, the main advantage of the life annuity sale is the economic benefit. In fact, he will have a life annuity until the end of his life, which is only taxable at 50% since the second installment. In addition, this type of contract offers tax advantages such as eliminating the need to pay home insurance, property tax and major works.

For the buyer, the main advantage is the possibility of acquiring a good at a price lower than its original price. In effect, the buyer agrees to pay the seller until the latter's death, so the annuity will stop at that time.

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