What difference between free and busy life annuity?

Buying or selling a life annuity is a transaction that can be tempting for both parties. But like any bet, it carries a share of uncertainty. Free life life or busy life annuity: each of the two formulas carries benefits and risks. In the first case, the purchaser enjoys the property immediately, whereas in the case of an occupied life annuity, the sale is accompanied by a reserve of usufruct for the benefit of the seller.

What is a free life annuity and a busy life annuity?

free or occupied life annuity A consists of selling a dwelling in exchange for the periodic payment of an annuity until the death of the seller. The seller is then called the creditor and the purchaser the derirentier. The latter can then purchase the accommodation without paying the full sale price on the day of acquisition. When selling a free life annuity, the sale is done in full ownership. The debirter then disposes immediately of the property to occupy or rent it. Conversely, in the case of a busy life annuity, the sale is accompanied by a reserve of usufruct for the benefit of the seller. The creditor may continue to occupy the dwelling or rent it if he is no longer able to occupy it. The property can then be occupied by the purchaser only after the death of the seller.

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Payment for a life sale?

Unlike a classic sale, in life annuity, the payment of the price is not immediate. The price is paid by an annuity paid for life to the creditor, and usually by a bouquet. This is an amount that the seller collects immediately on sale. The bouquet usually accounts for 30% of the value of the property, but it can be freely fixed by both parties. The annuity may be monthly, quarterly or yearly, and corresponds to real value of the property. The amount of this pension, calculated by a notary, is estimated according to several criteria, including:

  • The age and life expectancy of the creditor
  • The

  • rents he could collect if the property were rented The
  • value of the property
  • The number of heads on which the life annuity is concluded

Pros and cons of busy life annuity

The occupied life annuity will not be suitable for persons wishing to acquire property in the main residence. Indeed, the creditor always enjoys the usufruct of the property, even after signature. But in busy life annuity, the buyer benefits from a discount. The latter sees in fact the amount of the sale calculated with a discount of 25% to 50%. This discount corresponds to the cost of the right to use and dwelling the dwelling by the creditor. The purchaser therefore carries out a significant financial transaction but cannot enjoy the property immediately. As for the seller, he has the advantage of being able to stay in his home while benefiting from an immediate sum of money in case of a bouquet, and an annuity until his death.

Read also: What is a usufruct?

The peculiarities of the free life

Unlike the busy life annuity, in a free life annuity, the purchaser can take possession of the property upon signature . He can either occupy it, rent it or resell it. On the other hand, the free life annuity cannot take advantage of the discount enjoyed by the purchaser of a busy life annuity. The financial transaction is therefore less attractive for the deriver since the purchase price is higher.

On the other hand, by transferring bare ownership and usufruct, the creditor no longer has to worry about the management of his property. Due to the lack of a discount, it also carries out a better financial operation by benefi a bunch of an annuity greater than he could have negotiated for a busy life annuity.

The amount of the property is subject to a discount of 25% to 50%

No haircut

Usufruit Bare Ownership Value of the good
Life annuity Busy Rest to the creditor Cded to the debirtier
Life annuity free Cceded to the debirtier Cded to the debirtier

Quintesens advises and accompanies you The Quintesens Group specializes in global wealth management. Wealth balance, pension, investments, tax reduction, financing, heritage engineering: we put our expertise to your service and help you make your projects a reality. Contact our team to share your projects with confidence.

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