Despite the unpleasant nature of life annuity sales, where one party has a financial interest in the death of another, this formula can be interesting for both the seller and the buyer. We briefly outline its particularities.
Concept on life annuity sale
The life annuity is the contract of sale of real estate by which the buyer (Debrentier) pays to the owner (Annuitant) throughout the life of the latter, an annuity called life annuity.
In the case of a sale, the deed must be drawn up before a notary by both parties. In the authentic deed, a certain number of clauses must appear such as the identification of the parties and the identification of the property.
It will not be uncommon to also see the parties agree on a sales compromise prior to the execution of the authentic deed.
Annuity
The law allows the parties to freely set the amount of the annuity. This amount will therefore depend on the nature of the rights transferred; the life expectancy of the annuitant, but also the predictions that his state of health allows us to make; the value of the goods sold as well as their profitability; the possible existence and importance of the bouquet which was paid in cash upon signing the deed.
In order to ensure the balance of the contract and to protect the seller of the building, contractual freedom does not, however, authorize the sale to be made under derisory or non-serious financial conditions.
It should be noted that life annuities are not taxable in Belgium as long as they are paid by an individual natural person.
In such a case, the life annuity therefore constitutes a net monthly income for life.
Recommendations
Although it is legally possible to offer a life annuity property at any age, it is generally between 60 and 90 years of age that the sale with a life annuity will be the most interesting and will make it possible to find a buyer under the best conditions.
This sales formula is very interesting for the seller who will benefit from his capital himself, instead of leaving it to greedy or sometimes distant heirs who will give up a large part of it as inheritance tax.
It can also be interesting for the buyer who will pay less than if he had taken out a mortgage loan.
However, be careful because life expectancy is not an exact science.
