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There are three types of property retirement

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, There are three types of property retirement, Forex-News, Forex-News


, There are three types of property retirement, Forex-News, Forex-News

Real estate annuity is a model that is already popular in the USA and is now also coming to Germany. There are three ways to rent your own property and thus to get additional capital.

What actually is real estate retirement and what is it useful for?

Real estate annuity is particularly suitable for older people who own a property but need more liquid funds. The great advantage of this method is that the real estate residents can stay in the property and receive money at the same time. That is why real estate annuity is particularly interesting for seniors who have a low pension income and would like to top up their pension.

The annuity

With the annuity, as the name suggests, the property is completely passed on to a new owner, who, however, grants the original owner a lifelong right of residence. The purchase price is usually not paid as a sum, but given to the new owner in the form of a monthly pension over the years.

Accordingly, the amount of the monthly pension is adjusted to the expected life of the seller. However, when it comes to the monthly pension, sellers shouldn’t have too high expectations with this model. The market value of the property is used to determine the amount of the monthly pension. The value of the right of residence and the expected maintenance costs are then deducted from the market value, since the new owner will be responsible for repairs in the future. The pension must also be taxed. Subletting, repurchase or inheritance are not possible with this form.

The usufruct

The second variant of real estate annuity is the usufruct. Similar to an annuity, the property is sold to a new owner. The difference is that the purchase price is made all at once and therefore no monthly pension payment is possible.

What remains the same is the lifelong right of residence. However, there are differences in the design here. In the case of usufruct, the resident is responsible for the maintenance, but can also carry out conversions and, if desired, can also sublet the property.

To determine the purchase price, the expected service life is again taken into account, as well as the possible rental income and the capital value of the property.

The partial sale

The most flexible option for renting out a property is the partial sale. There are no right of residence and no obstacles to repurchases, but parts of a property of your choice can be sold and repurchased at a later point in time. Depending on your own needs, shares of up to 50 percent can be sold. In contrast to the other two variants, the seller remains the main owner of the property. He benefits from the increase in the value of the property and can freely decide on conversions, renovations and letting.

In order for this to be possible, however, he must transfer a pro rata rent to the new share buyer, also known as the user fee. The life expectancy is irrelevant with this model, the shares are sold at the determined market value. In addition, the property can still be inherited and the heirs could later buy back the shares at the new market value.

Image Sources: Syda Productions / Shutterstock.com



, There are three types of property retirement, Forex-News, Forex-News

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