Life annuity sale (viager)
A real-estate sale in which the buyer pays an initial capital sum called the bouquet, then a monthly or quarterly annuity until the seller's death. In an occupied viager the seller retains the right to live in the property. This structure requires actuarial pricing and specific financing, since standard mortgage lending is rarely suitable for this transaction type.
Key points
- The bouquet (initial lump sum) typically represents 20–40% of the property's market value.
- In an occupied viager the seller retains a right of use and occupation (DUH) deducted from value.
- The annuity is calculated using actuarial tables based on the seller's age and life expectancy.
- Aleatory risk is inherent: the buyer may end up paying more or less than the property's actual value.
Frequently asked questions
Why is a conventional mortgage rarely suited to a viager purchase?
The total amount payable is inherently unknown: the annuity duration depends on the seller's death. Banks cannot assess the final cost of the transaction or set up a standard mortgage charge, since the buyer does not yet hold full ownership. Viager purchases are generally financed from own funds or, for the bouquet, through a personal loan or a specific mortgage product.
What is the difference between an occupied and a vacant viager?
In an occupied viager the seller retains the right to live in the property until death; this occupancy right reduces the property's value for the buyer, so the annuity is lower. In a vacant viager the property is immediately available: the buyer can occupy or let it, but the annuity is higher as there is no occupancy discount. The occupied viager is by far the most common.
How is the life annuity indexed and treated for tax purposes?
The annuity is generally indexed to a published index (often the consumer price index or the construction cost index), as defined in the deed. For tax purposes, a fraction of the annuity is taxable as income from annuities purchased with capital: this fraction ranges from 30% to 70% depending on the seller's age when annuity payments begin, which can be advantageous for older sellers.
In practice
A 78-year-old owner sells her apartment, estimated at €300,000, as an occupied viager. The occupancy right (DUH) is valued at €80,000, leaving a net value of €220,000. The bouquet is set at €60,000 and the monthly annuity at €900. The buyer hopes to gain full ownership at a total cost that reflects the property's market value.
Official sources
- Buying or selling as a life annuity: the rules · Service-Public.gouv.fr
- Sale agreement and loan condition precedent · Service-Public.gouv.fr
- Housing and financing information · ANIL