Annuity, partial sale or a normal sale — what pays off?
Annuity, partial sale or sale — what suits you?
Three basic models are on the table. They differ more than the brochures suggest.
Life annuity
You sell the house, keep a lifelong right of residence and receive a monthly annuity. The value of the right of residence is deducted from the purchase price — what is paid out is noticeably below market value.
Usufruct
Similar, but you keep the full right of use and could even let the property. Fiscally interesting for a gift to your children, because usufruct lowers the value of the gift and allowances apply anew every ten years.
Partial sale
You sell a share, often up to half, and receive a lump sum. After that you pay a monthly usage fee on the sold part. Sounds flexible. It rarely is.
A partial sale is usually more expensive than a loan
The detail that surprises most people: the usage fee is usually 3 to 5 percent per year on the sold share.
≈ €10,000 / year
on a sold share of €250,000 — permanently, without the sum ever getting smaller
A normal bank loan for the same amount would in many cases be cheaper over ten years. You often still bear maintenance alone, and the provider has a say in the later full sale. I have seen owners who, after eight years, found little left of the original advantage.
What does each model actually bring in Dresden?
The figures hinge on three things: property value, your age and the value of the right of residence.
| Model | You receive | You stay | Typical catch |
|---|---|---|---|
| Classic sale | full market value | no (move) | emotional farewell |
| Life annuity | lump sum + annuity, below market | yes | few reputable providers in Dresden |
| Usufruct | depends on structure | yes | complex valuation, tax topic |
| Partial sale | share immediately | yes | ongoing usage fee, often costly |
A house in Loschwitz, market value €800,000. With a classic sale and a move into a barrier-free flat in Striesen for €300,000, around €500,000 remain as a reserve — tax-free if the holding period is met. No monthly burden, full freedom of decision. Financially, this option beats the annuity models almost every time.
When does an annuity still pay off?
There is the case where a life annuity or usufruct is the right choice: when staying is non-negotiable. No move, no change, whatever it costs. Then you consciously pay the premium for the security of staying in your own home — a legitimate decision.
Always secure the right of residence first-rank in the land register — otherwise don't sign
Only a first-rank right of residence survives if the buyer resells or becomes insolvent. If it is not first-rank, do not sign.
What your property is worth today is shown by the property value calculator. For the tax side, it's worth looking at selling tax-free after 10 years.
Tax note: Non-binding guidance, without warranty – not a substitute for tax advice.
Note: This information is no substitute for tax or legal advice.
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