Switzerland: property taxes

According to the Swiss Federal Law on the Acquisition of Real Estate by Non-Residents, the sale of real estate to foreigners is carried out on the basis of annual quotas issued for each tourist region. In some cases, these quotas are fully utilized within a year, resulting in a foreign buyer having to wait for the next year or longer (in some cases up to two years) to obtain a purchase authorization. This provision applies both to new construction projects and to property already in the possession of Swiss citizens or foreigners living in this country. Non-residents who have received a quota can transfer it by resale of their property.

Purchase taxes

Taxes in Switzerland consist of a direct federal tax, a communal land tax and a tax on estimated rental income, which is charged to owners of second residences. If a foreigner has managed to purchase real estate in Switzerland, then you need to be prepared for costs, which usually amount to about 5.5% of the value of the object. This amount includes cantonal and communal property transfer taxes, which are 3.3%, and notary fees, which are 1.7% of the purchase price.

Loan processing and insurance

When applying for a mortgage loan, the corresponding costs will be about 0.5% - this rate varies depending on the amount issued by the bank. For example, when buying a home on the secondary market, if the previous owner took out a mortgage loan, the buyer will pay the difference between the previous and new loan amount.

The future owner entrusts the notary (usually by issuing a power of attorney for him) the obligation to ensure that all legal formalities are fulfilled, in particular, registration in the land registry and release from all previous mortgages for this apartment. Also, a power of attorney is drawn up for a notary to ensure the fulfillment of all legal formalities: registration in the land registry and release from all previous mortgages for this apartment.

In some cantons (for example, in the territory of Vaud), fire insurance of buildings and furniture is compulsory, which is 0.055% of the value of the insured property. It is recommended to take out insurance at full replacement cost. As for the apartment, the cost of insurance is included in the commissions of the joint property.

Regular expenses

Traditionally, annual operating costs have been 0.8% -1.5% of the value of a property. However, the costs can be higher if the house is old and needs renovation. Usually, the costs are divided among the owners of all apartments located in the building in proportion to the thousandths of each owner.

Typically, these costs include cleaning and security fees, which are in the form of contributions. Also followed by social security contributions, building maintenance costs and supplies. The co-owner collects the appropriate amount of money to cover all the costs associated with the renovation of the building. Payment is made in advance, quarterly or every six months. Taxes are paid to the Swiss government, canton and commune. A monthly payment is made for water, gas, electricity and heating, insurance, landscaping, road repairs are paid. Administrative fees and other expenses are incurred.

Individuals are taxed only on property located in the canton and its income (income from real estate). Other income options are taxed at the owner's place of residence. The fiscal value of the property is used to determine the taxable estate (80% of the purchase price). The rent is equal to the amount that the owner would pay for renting such an apartment - this is the basis of income tax.

To the taxes listed above, add the following: direct federal tax, annual property tax, and tourist tax. Practice shows that the total amount of taxes is approximately 1% -1.4% of the purchase price of the property and can be reduced as part of the "tax optimization", when a revaluation of the property is required and a corresponding reduction in the fiscal value.

Typically, rental income during high season can cover almost all of the costs associated with it, including joint ownership and other taxes. Correct filling of the tax return will also allow in most cases to reduce the tax burden.

Inheritance

When inheriting property, the amount of tax depends on whether the heir is a descendant in a straight line or not, and some aspects also depend on the canton in which the object is located. But, as a rule, direct heirs do not pay tax.

Sales taxes

In the event of resale, the notary must, according to the law, withhold 5% of the sale price in order to pay tax on income from the sale of the property. The tax rate percentage decreases depending on the number of years the owner has owned the property.

The amount of payments for the sale of real estate in Switzerland depends on the period of ownership of the object - the amount decreases in inverse proportion to the years of ownership, and also depends on the legislation of the particular canton or commune where the object is located. Tax is charged on the income earned from the sale, i.e. the amount paid upon purchase, notary and agency costs, and the cost of major repairs are deducted from the sale amount. Then, this delta is taxed on income at a rate dependent on the period of ownership. This rate ranges from 0% to 40% depending on the factors mentioned.

Thank you for your help in preparing the material:

Oleg Sharonov, head of the SharonoFF company

Sergey Ilyin, expert of SIMA Immobilien