Purchasing properties with payments from life annuities

An older person receives a monthly life annuity in exchange for giving up the bare legal title to the property, while reserving the right to use and enjoy it for the rest of his/her life, whether for his/her own use or for renting to others.
This will increase his/her purchasing power and improve his/her quality of life.

He/she would be selling the legal title to the property but maintaining the right to use it for the rest of his/her life.

When an elderly person takes out a life annuity he/she enjoys the following advantages:

  • For the rest of his/her life or the agreed period, he/she will receive a monthly income according to age and sex, and according to the value of the property.
  • His/her purchasing power will increase considerably, resulting in an improved quality of life.
  • He/she will continue to enjoy the use of the property in the same way he/she has always enjoyed it as the owner, but will get an income from his/her property without having to give up the huge advantage of being able to continue living in his/her home, without having to undergo the disruption and inconvenience of moving out.
  • He or she will be able, if they wish, to immediately afford the cost of a residential home.
  • Formalizing the operation does not entail any additional cost. All expenses, professional fees and taxes that are generated are borne by the buyer. Nor will there be incurred in the future any extraordinary contributions of the Owners or receipts of property tax (IBI). The act of formalization is a public document.
  • If it's the house where you live in, and you are over 65 years old, you will get an excellent tax treatment as the income will be except of IRPF

Nevertheless, the main advantages are the legal guarantees that it offers:

  • The operation is formalised before a notary public in a deed of life-time or temporary annuity, which is registered in the Land Registry.
  • Guarantee of lifetime payment of all the incomes through the inclusion in writing of a resolutory clause, by which, in the unlikely event of non-payment, the elderly person would recover the full title to the property without having to return any of the monthly payments he/she has received.
  • Possibility of giving up the right to use and enjoy the property, perhaps to enter a residential home. From this date, you will receive a much higher income than you had been getting. Or rent out the property and increase your income.

Do you own your own home? Property can be an ideal complement for a pension, at a time of serious doubts concerning the viability of the current pension system. Now there’s the possibility of turning one’s own home into a complementary source of income for one’s later years. After the age of 60, pensioners can find in the market various plans, such as the reverse mortgage or the life-time annuity.