The sale of bare property, a good solution to complement the pension

During the first half of 2024, bare ownership operations have doubled in Spain, a good solution to complement the pension of many retirees who have their own home and receive little retirement income.

However, this is a market that has to grow a lot in our country: during the year 2023, only 1.845 operations of this type were carried out throughout Spain, according to the College of Registrars.

Bare ownership is a formula that allows people over 65 years of age to sell their habitual residence in exchange for a single payment or a real estate annuity, maintaining its usufruct; that is, the right to continue using the home for life.

The operations have an average discount of 35% on the market price

According to data from MAS VIDA, medium profile whoever carries out this type of operations is a person of about 75 years, which has a housing with a market value of about €340.000 y he gets about €220.000 for it, 35% less than its value.

In exchange for this discount, the homeowner maintains the usufruct and can continue living in their home for life. The price depends on the seller's age: the older the seller, the closer the sale price is to market value.

People over 65 years of age who want to obtain liquidity and supplement their pension

In Spain, 85% of those over 65 years of age own a home. Many of these people have a pension of less than €1.254, which is the average contributory pension in Spain, and they need to liquidate their real estate assets.

People who carry out these operations obtain liquidity to pay off debts; either for their own or to help their children with their mortgages, etc. They also formalize them to simply receive a significant amount, complement their pension and be able to enjoy their retirement without any hassle.

The user of this type of these products is a person or a couple of about 75 years old, who has their own apartment, generally in large cities, especially Madrid and Barcelona, ​​who wants to have a financial cushion or an annuity, but who wants to continue living forever in your home.

The liquidity obtained in these operations does not have to be taxed to the Treasury

A very interesting aspect of this type of operation is the tax treatment: those over 65 years of age who sell their habitual residence in one of these ways of liquidating their real estate assets do not have to pay taxes to the Treasury for the increase in assets from the sale.

According to data from MAS VIDA Of every 100 transactions of this type, 60% are for sale in bare ownership, 30% for a sale with guaranteed rent (the seller stays in the home paying a rent lower than the market price) and 10% for obtaining a reverse mortgage.

And among those who opt for the sale in bare ownership, 50% choose the modality of receiving a single payment, 5% a life annuity and 45% a mixed formula of both: an amount + a life annuity. All of them are excellent solutions to complement the pension.

The average time for formalizing operations is about 5 weeks from the start of the procedures (appraisal of the home, search for an investor, supervision of documentation, etc.) until it is signed at the notary. Operations are regulated by financial authorities.

These types of operations will grow exponentially in the coming years

Another option to supplement retirement income without losing ownership or use of the home is to apply for a reverse mortgage. According to an EPPARG study carried out in 13 countries, including Spain, the global reverse mortgage market in Europe will exceed 45.000 billion euros in 2033.

It is necessary to extend knowledge of this type of products to make it easier for the elderly to take advantage of their real estate assets; It is a very interesting formula so that they can obtain additional income to complement their pension that, in addition, does not pay tax as long as the affected property is their habitual residence.