24. September 2020, 06:31
If the money is not enough in old age, but a property is available and certain requirements are met, there are several ways to supplement your pension without selling your own four walls straight away. The experts at the full-service real estate service provider McMakler present several of these models.
Annuity or temporary annuity
The best-known model is real estate annuity, in which the owner sells the property below the market value. In return, the buyer guarantees a lifelong right of residence and an additional pension. The amount of this pension depends on the value of the property as well as the remaining life of the seller. “There are different types of retirement here. With the life annuity, the seller is entitled to a lifelong annuity. In the case of a time annuity, a minimum term is agreed for the repayment of the purchase price, which guarantees continued payment even in the event of death. That is why this type of property pension is inheritable, ”says Matthias Klauser, McMakler’s Chief Revenue Officer.
In the case of care
In the event that the seller has to move out of their own four walls at a later date, for example because they have to move into a nursing home, a usufructuary right (right of any use) can be agreed with the buyer. This enables the usufructuary to rent out the former home when moving to the nursing home in order to cover the care costs. This does not apply to the simple right of residence. The usufruct should also be entered in the land register.
Another model is what is known as the reverse mortgage. With this variant, owners conclude a loan agreement with a bank or insurance company. The property remains the property of the owner. The mortgage, on the other hand, is paid out to the owner in monthly installments. In contrast to normal real estate financing, the debt load builds up from year to year, so the principle of the mortgage works in reverse. “At the end of the term, the monthly installments end and the mortgage must either be repaid in one sum or the property changes into the ownership of the lender. If you are interested in it, you have to note that the monthly pension payments are often significantly lower than with the annuity, ”explains Klauser from McMakler.
For whom it pays off
Real estate retirement is most worthwhile for seniors over the age of 70 with small monthly income or low debts. Often this retirement option is also attractive for property owners who either have no heirs or do not want to inherit. If you want to inherit, real estate annuity is a way of relieving the heirs. Because with the retirement, provision is made for any costs that may arise in old age, for which the offspring would otherwise have to raise money. There is also the option of saving inheritance tax with the help of the annuity. The real estate expert from McMakler explains: “If, for example, the daughter takes care of her parents and inherits the family home after their death, a high inheritance tax is due. The parents could send their daughter monthly amounts from the pension payments while she was still alive in order to relieve her financially. “
It is therefore advisable to take a close look at your own situation. “Whether or not a real estate pension makes sense depends on the individual case. Ideally, it gives older owners planning security for their old-age provision and an additional financial cushion. Any costs incurred for maintenance or renovation are thus covered and enable an enjoyable retirement, ”says McMakler expert Klauser.
However, there are only a few providers in Germany who offer real estate financial products such as real estate annuity. The annuity is the most common but not popular. Models like the reverse mortgage are not very attractive for banks and savings banks because of their legal framework. “It looks different when selling a house,” emphasizes Matthias Klauser from McMakler. “This is preferred by everyone involved, since facts are created for buyers with the sale and sellers can achieve higher amounts.”
Further information on the topic Real estate retirement as well as illustrative sample calculations are available in the advice section on the website of McMakler.