Real estate retirement: what it is and how it works

Property annuitization is considered an alternative to buying and creates a win-win situation between buyer and seller. With an annuity model, owners who are old can stay in the property until the end of their property until the end of their lives and, for example, distribute an distribute a pre-inheritance to their descendants. The buyer does not have to take out a The buyer does not have to take out a loan from a bank to purchase the property, but can repay the installments from their current income.

Real estate retirement explained simply

Demographic change in Germany is leading to an ageing society society, which threatens to collapse traditional pension systems. threaten to collapse. If life expectancy and therefore the number of pensioners continues to rise pensioners continues to rise, the younger contributors will no longer be able to will no longer be able to generate pensions on their own. As a result, pension models models based on the sale of real estate will become attractive.

A property is usually purchased with a one-off purchase price payment. purchase price payment. With real estate annuities, however, the payment is made in in monthly, interest-bearing installments that are gradually paid off by the buyer. paid off by the buyer. The seller can also agree with the new owner that he can continue to live in the property for a certain period of time or can continue to live in the property for life. The exact annuity payment is determined according to standard actuarial principles and on the basis of pension factors pension factors of the Federal Statistical Office. The free design of the and annuity contract is an advantage of financing via advantage of real estate annuity financing compared to traditional financing, where where the terms of the contract are usually dictated by the bank. In addition, inheritance disputes can be avoided because the realization of the of the real estate assets is already regulated between living persons.

The annuity

With the life annuity, a considerable part of the investment in the property can be for the property can be "repaid in reverse", so to speak. The assets tied up in the property tied up in the property is recovered. In the past properties were passed on to the next generation after the death of the owner. passed on. This is rarely the case today, as the average age of the inheriting generation is currently in their mid-50s and many many people of this age already own their own property. For this many pensioners decide to continue to use the property for themselves and to recoup the assets invested over the years by annuitizing them. invested over the years. And they do so with these two models:

Time pension

In contrast to the life annuity, which is paid out as long as the seller is seller is alive, there is a time limit for the annuity. limitation. The purchase sum can be paid by the buyer as a one-off payment or in be paid in installments. With this option, the seller also retains the right to continue living in the property. A decisive difference difference is that in the case of time annuities, the age and gender of the age and gender of the seller are not taken into account.

Advantages of real estate annuities for sellers at a glance:

It is possible to stay in the house or apartment and at the same time and at the same time receive the purchase price installments for the property, which a good supplement to the small pension.

The pensioner retains the right to live in the property, while the new owner takes care of maintaining the property.

With an annuity agreement, the seller often achieves greater total proceeds than with a one-off payment.

The pensioner can decide how long she wants to continue living in the property. continue to live in the property. If the pensioner decides to do so, move to a smaller apartment or retirement home after five years, for example retirement home, the monthly pension is increased by the value of the previous previous right of residence.

Calculation of the monthly pension

First, the purchase price of the property is determined by a real estate real estate expert. This is based on the purchase price minus the average life expectancy determined by the Federal Statistical Office. average life expectancy. It should also be noted that the annuity does not deviate from the German consumer price index. With the notarized conclusion of the purchase contract, the sum of the installments and the seller's and the seller's right of residence are entered in the land register.

In order to safeguard the seller, certain obligations are also which must be fulfilled by the buyer. These include that the buyer is liable for the regular payment of monthly payments. monthly payments. A retransfer of the property can also be stipulated for certain of the property can also be stipulated.

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