Buyer's Guide

Occupied Life Annuity

Some say life annuity is a lottery. To a certain extent, this is true, although it is a lottery in which one's stake is never lost, whilst in most ordinary lotteries, the losers' stakes pay for the winners' prizes.

It is possible to compare the sale of an occupied property in exchange for a life annuity with entering a prize draw in which it is impossible to lose.

The jackpot is effectively the premature death of the annuitant.

The guarantee is the fact that the value of the property will rise continually, unless a major economic crisis occurs, which has not been the case since 1975. In this time, the average price of a square metre of property in Paris has increased from 800 euros to 3,000 euros.

It is therefore a wise move to buy an occupied property using the life annuity scheme. It is surely the only way of investing in the future without a major initial payment, and the only certain way of becoming the full owner of one or several properties on top of one's primary residence.

Contrary to popular opinion, it is ideal to buy occupied property from relatively young sellers (70 to 75 years).

This will allow you, depending on how much you invest, to buy property with a higher value than those occupied by people over the age of 80, thus enabling you to multiply the number of purchases you make in order to maximise the possibilities of capital gain in the future.

It is actually preferable to buy five studios occupied by relatively young sellers, rather than a 4-room apartment occupied by older people.

The younger the sellers are, the lower the price will generally be, and the lower the monthly annuity will be.

I will be more than happy to show you, by way of examples, the best purchases to make depending on your property-holding situation and your future investment plans.

Buyer's tax situation

Annuity payments are not deductible from your income. Do not attempt to use this scheme as a means of paying less tax.

Nonetheless, if you do not pay annuities in monetary form (as 99.99% of people do), the value of these payments can be completely deducted from your income.

On the other hand, your capital gain will be smaller, even in the event of the premature death of the tenant. The amount will not actually be calculated in relation to the price you paid, but according to the fiscal value declared at the time of the purchase. The normal rules regarding capital gains will be respected.

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