Using property for old age

Some seniors want to settle their inheritance early and pass it on to their heirs while they are still alive. Others, who may not have heirs, want to fulfill a long-held dream, such as traveling to the Maldives. But how can they utilize the capital tied up in their property without having to move out? There are several options.

The following models allow you to monetize your property while still continuing to live in it:

reverse mortgage

You can sell your property and retain a lifelong or time-limited right of residence, rent-free. The price for your property can be paid as a lump sum, a monthly annuity, or a combination of both. The right of residence and the annuity payments should be recorded in the land register. The allocation of costs for maintenance and other expenses should also be contractually agreed upon.

Sale with usufruct rights

This model is similar to a reverse mortgage with right of residence. However, the right of usufruct grants you more rights and obligations. You can continue to use the property, meaning you can live in it or rent it out, thus generating income from it. However, with a right of usufruct, you remain responsible for the costs and risks associated with the property.

Partial sale

You can also sell a percentage share of a property, up to a maximum of 50 percent. Here, too, you can receive the purchase price as a lump sum, a monthly annuity, or a combination of both. However, you will have to pay a usage fee for the right to live in the sold portion. Sellers and heirs can reserve a right of repurchase upon sale. The allocation of all associated property costs must be agreed upon.

lease-back purchase

With this model, you sell your property and enter into a lease agreement with the new owner. The advantage here is that there are no deductions from the sale price, unlike with reverse mortgage models.

If you are interested in one of these models, you should seek advice from an experienced real estate professional. The calculation of the individual purchase prices and annuities depends on various factors, such as the current market value of the property, the seller's age, and their statistical life expectancy, and is based on a complex formula.

Would you like to know how you can use your property in your retirement or which option suits you best? Contact us! We would be happy to advise you.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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