This is the Company / Investment Group that formalises the operation as the purchaser of the bare ownership and that undertakes in the Deed to pay the Elderly Person the monthly rent for the rest of his or her life or for the established term, as well as the expenses and taxes that are linked to the bare ownership of the dwelling (Property Tax, extraordinary Community expenses and insurance of the contents of the dwelling).
This is a legal clause that is included in the Life Annuity Deed and with which the Elderly Person is fully guaranteed the collection of the monthly rents, since if the hypothetical case arises that the Annuitant does not receive two rents (consecutive or alternating), the full ownership of the property reverts back to the Elderly Person. Furthermore, in this situation he/she would not have to return any of the amounts collected up to that moment.
This is the public deed that is signed before a Notary Public and in which all the conditions that the parties agree to in the constitution of this product are contemplated.
The Life Expectancy of a Person is determined under age and sex, based on what is established in the official Tables published for this purpose by the National Institute of Statistics and the Directorate General of Insurance. Together with the value of the property, it is one of the fundamental data for calculating the annuity.
The contracting of a Life Annuity or Temporary Annuity has unbeatable tax advantages. First of all, the transfer of the bare ownership of the main residence belonging to people over 65 years of age is exempt from taxation in the Personal Income Tax (IRPF, in Spanish).
With regard to the monthly income received, this is considered to be income from movable capital and enjoys significant tax exemptions. Thus, people over 70 years of age who take out a Life Annuity are exempt from taxation on 92% of the amounts they receive as monthly income. In cases where a Temporary Annuity is taken out, the exemption is established according to the period of reception of the annuity (7, 10, 12, 15 years, etc.), and its tax treatment is also highly advantageous, as it ranges from 88% to 75% exemption. In short, from each of the monthly incomes that the Elderly Person receives, the Tax Agency retains a very small amount (1.52% in most cases), which makes the taxation of the annuity one of its great advantages.
These are the taxes and expenses generated by any property. When constituting a Life Annuity, the distribution of these expenses between the buyer and the Elderly Person is as follows:
– The Buyer assumes the expenses that are inherent to the bare ownership of the property, that is to say, the Property Tax, the extraordinary Community expenses and the premises insurance of the property.
– The Elderly Person will continue to pay the expenses that correspond to the use of the dwelling of which he/she continues to be the owner, i.e. the ordinary community fee (which involves the porter’s lodge, central heating, lift, portal and staircase electricity, mains water, etc.), the Urban Waste Tax and the Civil Liability and Contents insurance, the latter if the Elderly Person wishes to take it out.
These are those expenses (valuation of the property, Notary and Land Registry fees) and taxes (Tax on Property Transfers, Stamp Duty and Municipal Capital Gains Tax), which arise with the formalisation of a Life Annuity / Temporary Annuity. All these costs are borne by the buyer, so that the Elderly Person will not have to pay any amount when taking out a Life Annuity Property Annuity.
The full ownership of a property is made up of two legal concepts or rights: the bare ownership and the usufruct. When an Elderly Person takes out a Life Annuity on his or her home, the purchaser or payer of the rent only acquires the bare ownership, and is therefore limited as owner by the rights inherent to the use and enjoyment reserved by the Elderly Person. At the end of the transaction, the bare owner of the property automatically becomes the full owner of the property, as the usufruct for life is consolidated with the bare ownership as a consequence of the death of the Elderly Person.
Official body where the operation is registered, expressly stating the new owner of the bare ownership, as well as the Resolutive Condition included in the Deed. On the other hand, the Elderly Person will continue to be recorded in the Property Register as the holder of 100% of the usufruct of the property.
This is the Elderly Person or Elderly Persons (1 or 2 title holders), who, as owners of a home, will become the recipients of the monthly income once the Life Annuity Deed for their home has been formalised.
This is the right to use and enjoyment of the home of which the Elderly Person remains the owner for as long as he/she lives. This right allows the Elderly Person to continue using the home under the same conditions as when he/she was the sole owner.
In addition, the Elderly Person can voluntarily transfer this right of usufruct to the payer of the monthly rents (the sole owner) at any time he/she wish, thereby obtaining an increase in the monthly rents they were receiving up to that date. This possibility is used by those who wish at some point to leave their home to move to a Residence or any other address, thus increasing their income to be able to meet the costs of the Elderly Centre in which they wish to reside and at the same time totally eliminating the expenses of the house that they were assuming until that moment.