Market Value
Market price of a property if it were sold free of any occupancy, the basis for calculating the life annuity.
Full definition
The market value is the price at which a property could be sold under normal market conditions, that is to say free of any occupancy and without any particular constraint. It constitutes the starting point for calculating a life annuity.
To determine the market value, several methods are used: comparison with similar sales in the area, estimation by a property expert, or the rental income capitalisation method. In Luxembourg, it is recommended to call on an accredited expert for a reliable valuation.
In an occupied life annuity, the market value is reduced by the value of the occupancy right (right of use and habitation or usufruct) to obtain the "occupied value". This discount depends on the seller's age and the scales used. The market value must be stated in the authentic deed to guarantee the transparency of the transaction.
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Related terms
Occupied Value
Value of the property in an occupied life annuity after deduction of the occupancy right (right of use and habitation or usufruct), the basis for calculating the bouquet and annuity.
Occupancy Coefficient
Percentage discount applied to the market value according to the seller's age, to calculate the value of the occupancy right.
Life Annuity
Property sale where payment is made in the form of an annuity paid to the seller until their death, with or without an initial bouquet.
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