Frequently Asked Questions – Investments in Life Annuities
Can a commercial company carry out Property Annuities?
Of course. A company, independently from its legal status, may acquire ownership of any property for its business assets. It must fulfil the payment obligations in each case, accounting for each one of the payments according to the current General Accounting Plan.
Can a physical person carry out a Life Annuity?
Indeed, there is no difficulty, although it must be considered that the taxes generated are different to those produced when the buyer is a legal person, as Inheritance Tax may enter into play.
Is it possible to participate as investor in a single property?
There is no problem in doing so. Each property acquired in the Life Annuity scheme is totally independent from the rest. Nevertheless, it is desirable that these investments are spread over various homes, as when there is an actuarial component in the instalments of each operations in terms of the different life expectancies of the usufructuaries, the better the number of properties which will easily fulfil the expected instalments and profitability in the property portfolio of each Investor.
What are the average periods for this type of investment?
There are no predetermined periods, as these depend on the different dates upon which the operations are completed, that is, upon the death of the Rentier. The initial reference for the period of each investment will be the estimated Life Expectancy of the usufructuary/usufructuaries. Normally, the average period of Property Annuity operations is between 8 and 15 years.
What expenses, professional fees and taxes does the acquirer of a property of these characteristics have to pay?
When formalising the operation, the buyer of the home through a Life Annuity or Temporal Annuity scheme has to assume the following professional fees and taxes: the Notary Public and Property Register fees, the GRUPO RETIRO brokerage fees, the Property Transfer Tax, Stamp Duty for the Resolutive Condition and Municipal Capital Gains tax. This final tax, although chargeable to the sellers as taxable persons, will be borne by the buyers in these operations, a fact which will be taken into consideration for the determination of the final economic conditions of the operation.
Likewise, annually and during the period of the operation, the buyer will have to pay the agreed monthly instalments, the Land Value Tax, unforeseen expenses of the Housing Association and the Home Contents Insurance.
What services does GRUPO RETIRO offer to the investor/buyer?
GRUPO RETIRO’s team of professionals, specialised in consultancy and brokering of these operations since 1996, carries out all necessary management for the investor to formalise the bill of sale, among which are the preparation of the Deed, legal assistance when signing at the Notary Public’s office, the preparation and presentation of taxes, the change of ownership before the Housing Association, the changes of direct debits of expenses and taxes, accounting and/or tax advisory, and any other process necessary. Likewise, our professional services continue during the period of operations to resolve any issue or incident which may arise during its course.
What profitability is obtained through investment in Life Annuities?
The final Profitability of each operation depends on the Net Result of the availability of the property and, in turn, will be mainly linked to the time elapsing from the date when the operation is formalised and the death of the Rentier.
Are the usage rights reserved by the Senior Citizen inherited by a relative (children, nephews/nieces, etc.)? No, in no case. The usage rights allow the owner to use the property until their death, at which time said usage rights automatically end, consolidating the buyer’s ownership.
How is the survival of the usufructuary verified? In the Deed, the obligation of the usufructuary to prove that they are still alive every six months is established. Nevertheless, both relatives and those close to the senior citizen must always communicate their death. Furthermore, GRUPO RETIRO maintains permanent contact with the Senior Citizens and/or their family environments.