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What is a real estate annuity and how does it help increase pension money?

Date: July 18, 2024 Time: 05:48:51

Owning a home is the way in which many Spaniards have saved. When retirement arrives, many people consider using that house to supplement their pension income. There are many formulas on the market for this and one of them is real estate annuities. This formula specifically allows you to maintain residence and obtain income, transferring ownership during your lifetime, as detailed in the guide presented by Mapfre ‘Housing and pension: Guide to monetize housing and improve your pension’.

In essence, it consists of putting two interested parties in contact where one of them sells the home – the senior retiree – and the other – the investor – takes possession of it upon his death. In exchange for the property, the investor agrees to pay a monthly rent until the death of the senior. The amount of the rent is stipulated depending on the age of the senior (and, ultimately, life expectancy at the time of contract), the value of the home and whether a single advance payment is desired for the importation of a property. home value faction

It is a contract by which full or bare ownership of the home is sold in exchange for periodic income for life. A real estate life rental contract does not need to be brokered by an insurance company, although it would carry the guarantees derived from the preparation of a technical note, the provision of regulatory capital and submission to control and supervision. . of the General Directorate of Insurance and Pension Funds (DGSFP).

How real estate annuity works

The owner of the property offers the sale of the property. The operation is carried out through an intermediary, such as a real estate agency or a law firm.

The investor acquires the property depending on the chosen modality. In exchange, it agrees to pass a lifetime monthly income to the seller. The agreement is undone if the investor fails to pay rent for two months in a row.

In the type of occupied real estate annuity, the investor acquires full ownership of the home upon the death of the usufructuary. It is important to note that in real estate annuities there is a risk of premature death, which can be mitigated or eliminated in those operations carried out through an insurance entity that incorporates reversion options to third parties (the spouse), counterinsurance (insured capital for case of death) or a certain guaranteed period.


– Those over 65 years of age who sell their habitual residence are exempt from personal income tax as long as the annuity is contracted within a period of 6 months. The import limit is 240,000 euros.

– Real estate income is subject to tax credits depending on the age of the recipient of said income. Table 2 details the liens by amount of the rent provided.

– In the case of a real estate annuity with two beneficiaries and a reversion option, in the event of the death of one owner, the other must pay inheritance and gift tax to continue collecting the total income.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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