Life annuity sale and annuity income: 2026 taxation

Quick answer. In a French viager, the seller (the annuitant) receives a lump sum, then a life annuity until death. Only a fraction of the annuity is taxable, set by the seller's age at the start: 70% before 50, 50% from 50 to 59, 40% from 60 to 69, 30% from 70 onward (French Tax Code art. 158, 6). The sale triggers a real-estate capital gain, exempt if it is the main residence. The buyer pays transfer duties of around 5.80%.

The viager, a French life-annuity property sale, intrigues as much as it worries, and its taxation is often misunderstood. Yet it is a regulated mechanism with stable rules. Whether you are considering selling your property as a viager to supplement your income, or buying one, here is how tax treats each party in 2026, without needless jargon and with the exact thresholds.

Selling as a viager means transferring a property against payment spread over the seller's life.

The lump sum (bouquet) is capital paid in cash at signing. It is freely negotiated and represents part of the price. Not every viager includes one, but it is customary.

The life annuity (rente viagère) is an amount paid periodically to the seller, the annuitant, until death. It is usually indexed to track the cost of living. It is the heart of the viager: the buyer, the annuity debtor, pays as long as the seller lives.

We distinguish the occupied viager, where the seller keeps the right to live in the home, reducing its value by an occupancy discount, from the vacant viager, where the buyer has immediate use of the property. The logic of the occupancy discount echoes that of split ownership, which we explain in our article on the split of ownership.

This is the central rule, and the least known.

The annuity received by the seller is taxable only on a fraction, set once and for all by the annuitant's age on the day the annuity starts (French Tax Code art. 158, 6):

In practice, a 72-year-old seller receiving 12,000 EUR of annuity per year is taxed only on 30%, i.e. 3,600 EUR, added to other income and subject to the income-tax scale. This fraction also bears social levies. Unlike retirement pensions, the onerous life annuity does not benefit from the 10% allowance.

The age used is that of the day the annuity starts, and the fraction stays fixed thereafter, even as the annuitant ages. Hence the benefit, for an older seller, of a low percentage: past 70, 70% of the annuity escapes income tax.

A viager sale is a sale: it triggers the individual real-estate capital-gains regime.

The gain is calculated on the sale price, which corresponds to the lump sum plus the capital value of the annuity, that is the annuity capitalised at the date of sale. The holding-period allowances apply, leading to income-tax exemption at 22 years and social-levy exemption at 30 years (impots.gouv.fr).

Key point: if the property sold is the seller's main residence, the gain is exempt, as for any sale of a main residence. This is the most frequent case of the viager, and it then erases any capital-gains taxation, regardless of the annuity. The annuity itself remains taxed each year on its age fraction: there is no double counting of the gain, but an annual taxation of the annuity that overlaps.

The buyer, the annuity debtor, first bears the acquisition costs.

They pay transfer duties of around 5.80% (up to about 6.30% depending on the department), based on the value of the property, that is the lump sum plus the capitalised annuity, after the occupancy discount in an occupied viager. Usual notary fees are added.

The annuity they then pay is, for a private purchase, not deductible from their income. The viager is therefore not a tax-saving investment for the buyer: it is a spread acquisition, whose return depends on the seller's longevity.

On the real-estate wealth tax, the buyer includes the property in their taxable estate if it exceeds the 1.3 million EUR threshold (art. 964), while the seller in an occupied viager declares the value of their occupancy right. The annuity debt may, under conditions, be deducted from the buyer's estate: a point to check case by case.

The viager follows strict validity rules that must be respected.

The uncertainty (alea) is the condition for the viager to exist: no one must know in advance how long the payments will last. If the seller dies within twenty days of the sale from an illness they knew about, or if the annuity is so low that it conceals a gift, the contract can be voided or reclassified. Between relatives, the risk of reclassification as a disguised gift is real: the authorities check that the price and the annuity are genuine.

The indexation of the annuity is essential for the seller: without an indexation clause, inflation erodes the annuity over the years. The clause must be set in the deed.

The reversion of the annuity, to a surviving spouse, must be stipulated if wanted. It changes the annuity calculation.

The viager is first a tool for income for an older seller, and the taxation favours them: past 70, only 30% of the annuity is taxed, and the gain is often erased by the main-residence exemption. For an asset-rich, cash-poor senior, it is a way to turn real-estate wealth into regular income while staying at home in an occupied viager.

For the buyer, the viager is a bet on duration: it offers no tax advantage, and its return depends entirely on the annuitant's longevity. It is a wealth purchase to handle with care, never an optimisation.

In all cases, the contract is built with a notary for validity and valuation, and the tax analysis deserves to be set out upstream, which we do in our wealth management missions. The capitalisation of the annuity and the occupancy discount follow a logic close to that of the split-ownership scales.

A 74-year-old widow, owner of her flat, has a small pension and wants extra income without moving. The occupied viager gives her an immediate lump sum and an indexed monthly annuity, while keeping the use of the home. On the tax side, the gain is exempt because it is her main residence, and only 30% of the annuity is taxed given her age. The arrangement, validated at the notary with a serious valuation and an indexation clause, provides her with a durable income. The buyer, in turn, accepts a longevity uncertainty in exchange for a spread price.