A 75-year-old homeowner receives a modest pension but owns an apartment valued at several hundred thousand euros. They would like to stay in their home while accessing capital to improve their quality of life. A life annuity sale is designed for exactly this situation: it turns illiquid property wealth into tangible income without requiring the seller to move.
The arrangement is based on a long-standing principle governed by Articles 1968 to 1983 of the French Civil Code. The buyer pays an initial lump sum (the bouquet), followed by periodic annuity payments until the seller’s death. What is changing in 2026 is not the law, but the context: pensions are under pressure, access to credit is becoming more difficult, and an ageing population owns a substantial share of France’s housing stock.
Calculating the bouquet and life annuity: what determines the price
The price of a life annuity sale is not negotiated in the same way as a conventional property sale. It is split into two components, with the balance between them depending on the seller’s age and the property’s value.
The bouquet is the lump sum paid on the day the contract is signed. It generally represents a portion of the property’s market value, often between 20% and 40%. The older the seller, the higher the bouquet tends to be, because the expected period over which the annuity will be paid is shorter.
The annuity is calculated using mortality tables. The bouquet is deducted from the property’s value, and the balance is divided by the seller’s statistically estimated remaining life expectancy in months. The annuity offsets the discount for the seller’s continued occupancy of the property. In an occupied life annuity sale, the buyer pays less because they do not have immediate use of the property.
Here is a simple example. An apartment is worth €200,000. The seller is 78. If the bouquet is set at €60,000 and their statistical life expectancy is twelve years, the monthly annuity comes to around €970.
But if the seller lives longer, the buyer continues to pay. The entire story of life annuity sales in 2026 revolves around this uncertainty: no one knows the exact duration of the contract when it is signed.
Taxation of life annuity sales: tax on the annuity and bouquet
Are you receiving a life annuity and wondering how much tax the authorities will charge? The answer depends on your age when the first payment is made.
Only a portion of the annuity is subject to income tax. The French General Tax Code provides for a tax allowance that increases with the seller’s age:
- 70% of the annuity is taxable if the seller is under 50 when the first payment is made
- 50% between the ages of 50 and 59
- 40% between the ages of 60 and 69
- 30% from age 70 onwards, significantly reducing the tax burden for older sellers
In practical terms, a 75-year-old seller receiving a monthly annuity of €900 will be taxed on just €270. The rest is exempt from income tax.
The bouquet, meanwhile, is subject to the tax rules for capital gains on real estate. If the property sold is the seller’s primary residence, the bouquet is exempt from capital gains tax. This is the case for the vast majority of occupied life annuity sales.
Occupied, vacant or annuity-free life annuity sale: which option suits which profile?
Occupied life annuity sales dominate the market. Estimates published by specialist networks put their share at around 90% of transactions. The seller retains a right of use and habitation (DUH), recorded in the notarised deed. They stay in their home while the buyer waits.
A vacant life annuity sale works differently. The buyer takes possession of the property as soon as the contract is signed. They can live in it or rent it out. The price is higher because there is no occupancy discount. This option appeals to buyers looking for a rental investment without taking out a conventional bank loan.
An annuity-free life annuity sale (also known as a bare ownership sale) removes the uncertainty. The seller transfers bare ownership for a fixed price, retains the usufruct, and receives no annuity. This arrangement suits sellers who prefer an immediate, guaranteed lump sum to an uncertain monthly income.
A modest market despite media interest
Market figures should be treated with caution. Estimates for 2025 vary by network: around 5,500 transactions a year according to Viagimmo, and close to 6,000 according to other sources. Life annuity sales account for less than 1% of property sales in France. The market is growing, but slowly.
An ageing population and pressure on pensions are creating favourable conditions. The number of homeowners over 70 is rising, and many own property but lack sufficient income to fund ageing in place or a potential loss of independence.
Life annuity sale pitfalls: what to check before signing
The contract’s uncertainty is both its strength and its weakness. If the seller dies shortly after signing and the buyer knew about their health condition, a court may annul the sale. The French Civil Code requires genuine uncertainty for the contract to be valid.
Another point that is often overlooked is the buyback clause. Some deeds allow the seller’s heirs to reclaim the property if the annuity is not paid. Others do not. Checking the termination clauses in the notarised deed protects the seller if the buyer defaults.
- The seller should ensure that the annuity is indexed to an index (often the Consumer Price Index) to protect its purchasing power
- The buyer should factor the property’s maintenance costs into their calculations, even if they do not occupy it
- Both parties should consider using a notary who specialises in life annuity sales, as errors in drafting the deed can lead to costly disputes
A reverse mortgage, sometimes presented as an alternative, remains virtually nonexistent in practice. According to a finding shared at the French Notaries’ Congress and reported by Mind Fintech in October 2026, no such loan had been granted since 2019. The gap between the theoretical need and the actual availability of bank products remains considerable.
A life annuity sale is neither a miracle investment nor a morbid gamble. It is a specific estate-planning tool whose suitability depends on the seller’s age, the property’s value, the wording of the deed and the buyer’s ability to pay the annuity over an unpredictable period. A well-structured life annuity sale relies on a robust notarised deed and genuine uncertainty.
