Viager in France: bouquet, annuity and annuity tax

How a viager sale works

The seller (the crédirentier, annuitant) transfers their property to a buyer (the débirentier, annuity payer) in exchange for a life annuity, paid monthly, quarterly or annually until their death. At that point, the buyer takes full possession of the property without any formality (service-public.gouv.fr). The acte authentique (notarised deed of sale) must be drawn up by a notaire.

The contract is aléatoire (contingent): nobody knows how long the annuity will be paid. The Civil Code draws two consequences from this:

• a contract created on the life of a person already dead on the day of the contract “has no effect” (art. 1974);
• the same applies if the person was suffering from the illness from which they died within twenty days of the date of the contract (art. 1975).

Occupied or vacant viager

Occupied viager (viager occupé). The seller keeps, until their death, the usufruit (usufruct: they can live there or let it and collect the rent) or a simple droit d’usage (right of use: they live there but cannot let it). Unless the deed states otherwise, they pay routine maintenance, energy, taxe foncière (property tax) and the household waste collection tax; the buyer bears major repairs (main walls, vaults, beams, whole roofs).

Vacant viager (viager libre). The buyer has the property from signature: they occupy or let it, and pay all charges, taxes and repairs (service-public.gouv.fr).

Bouquet and annuity: how the price is set

The price generally consists of the bouquet and the annuity. The law leaves the parties free: “The life annuity may be set at whatever rate the contracting parties please” (Civil Code, art. 1976). According to service-public.gouv.fr, the amount of the annuity depends on the seller’s age and life expectancy, the value of the property, the bouquet paid and the rent the property could bring in. The notaire calculates it using scales, which can be consulted with an insurance company or a notaire.

There is no statutory scale for the annuity. The only scale set by law that touches on these matters is a tax one: article 669 of the CGI values the usufruct according to the usufructuary’s age for the purpose of calculating registration duties and taxe de publicité foncière (land registration tax):

The full scale starts at 90% usufruct under 21 and falls by 10 points per decade.

Protecting the seller. Mere failure to pay the instalments does not entitle the crédirentier to claim back the capital (art. 1978). Hence the value of the clauses recommended by service-public.gouv.fr: a clause résolutoire (termination clause) to take back the property after several unpaid instalments, a clause pénale (penalty clause) to keep the bouquet, and a clause d’indexation (indexation clause, for example on the Insee consumer price index). With two sellers, the annuity can be réversible (paid in full to the survivor) or réductible (reducible).

Viager taxation

For the seller, the annuity. Life annuities created for consideration are taxed only on a fraction, determined by the crédirentier’s age when payments begin (CGI, art. 158, 6):

Official example: an annuity of €2,000 a year received since the age of 65 is taxable at 40%, i.e. €800 to declare (service-public.gouv.fr). The taxpayer declares the gross amount; the tax authority calculates the taxable share.

For the seller, the capital gain. The sale price, bouquet and annuity included, falls under the property capital gains regime, with possible exemption if the property is the main residence. The capital gain is taxed in full in the year of the sale, whatever the payment arrangements (service-public.gouv.fr).

Which professional to consult

The notaire is essential: they draw up the deed, calculate the annuity from scales and draft the termination, penalty and indexation clauses. An agent immobilier (estate agent) helps estimate the property’s market value and rental value, two figures used to set the bouquet and the annuity.