Vacant Life Annuity
Sale via life annuity where the buyer can occupy or let the property immediately after the purchase.
Full definition
The vacant life annuity is a form of sale via life annuity where the property is sold without any occupancy right for the seller. The buyer can therefore use the property immediately: live in it, let it or leave it vacant.
This arrangement is rarer than the occupied life annuity (around 10% of transactions) but offers specific advantages. For the seller, the life annuity is significantly higher since there is no discount linked to occupancy. For the buyer, rental income can be generated as soon as the property is acquired.
The vacant life annuity is suited to sellers who do not live in the property (second home, inherited property) or who plan to move (care home, moving closer to family). In Luxembourg, this arrangement is particularly attractive to investors looking to build up a property portfolio.
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Related terms
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.
Occupied Life Annuity
Sale via life annuity where the seller retains the right to live in the property (right of use and habitation or usufruct) until their death.
Bouquet
Capital sum paid to the seller on the day the deed of sale via life annuity is signed, generally between 20% and 40% of the property's value.
Life Annuity (the pension)
Sum paid periodically (monthly or quarterly) to the seller until their death, calculated according to the value of the property and life expectancy.
Market Value
Market price of a property if it were sold free of any occupancy, the basis for calculating the life annuity.
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