A life annuity sale involves the transfer of property ownership in exchange for regular payments to the seller for the remainder of their life. For example, a senior homeowner might sell their house to a buyer who agrees to make monthly payments until the seller’s death. The purchase price is typically lower than market value, reflecting the uncertainty of the seller’s lifespan. Several factors influence the payment amount, including the property’s value, the seller’s age and life expectancy, and prevailing interest rates.
This type of transaction offers distinct advantages for both parties. Sellers gain a guaranteed income stream, potentially supplementing retirement funds and enhancing financial security. Buyers can acquire property at a potentially reduced price, albeit with delayed full ownership. Historically, these arrangements provided a means for older individuals to convert home equity into income without relinquishing their residence. Today, they remain a valuable tool for estate planning and financial management.
