Everything You Need to Know About Real Estate Gains Tax in the Canton of Vaud

Real Estate Capital Gains Tax in the Canton of Vaud: How It Works

The real estate capital gains tax is generally payable by the seller when a property is sold at a profit. A minimum threshold of 5,000 Swiss francs applies—profits below this amount are tax-exempt.

The canton of Vaud has a proportional real estate gains tax. The tax rate is independent of the amount of the gain, but decreases the longer the property has been owned.

Canton of Vaud operates under a dualistic system. Only capital gains from the sale of real estate held as part of the private assets of natural persons are subject to capital gains tax. Gains arising from the sale of business assets or from commercial real estate trading, on the other hand, are taxed under the profit or income tax system.

A progressive tax rate applies to higher gains: the higher the taxable gain, the higher the tax rate. In addition, surcharges or reductions may apply depending on the length of ownership.

Tip: You can find further information, contact details, and tax return forms on the official website of the Canton of Vaud.

How is real estate gain tax calculated in Vaud?

The tax is based on the taxable real estate gain. This is equal to the sales proceeds minus the acquisition costs.

Proceeds from the sale – purchase price – value-enhancing investments – deductible expenses

= taxable capital gain

The taxable capital gain is multiplied by the applicable tax rate; any surcharges or rebates are then calculated to determine the actual tax amount.

The following deductions are allowed for the calculation of property gains tax in the Canton of Vaud:

1. Purchase Price

The notarized original purchase price, including all acquisition costs, such as notary fees or land registry fees.

2. Value-Adding Investments

Investments in permanent structures, renovations, utility connections, alterations, and additions.

3. Mortgage costs

The costs of mortgages taken out at the time of purchase. The costs of mortgages for renovations and repairs are also deductible.

4. Brokerage fees

The costs of mortgages taken out at the time of purchase. The costs of mortgages for renovations and repairs are also deductible.

Broker commissions and incidental costs actually paid in connection with the sale of the property.

Important: Maintenance costs or expenses incurred solely to preserve the property’s value are not deductible.

How much is the capital gains tax in Vaud?

Capital gains of up to 5,000 francs are tax-exempt in the canton of Vaud. For higher gains, a proportional tax rate applies. This means that the tax rate remains the same regardless of the amount of the gain.

However, the holding period is taken into account when calculating the capital gains tax. The longer the property has been owned, the lower the tax rate.

The tax rate is a maximum of 30 percent for a holding period of less than one year. It then decreases with each additional year. For example, the tax rate is

• 18 percent after a five-year holding period

• 14 percent after a ten-year holding period

• 12 percent after a 15-year holding period

After 24 years of ownership, the minimum tax rate of 7 percent is reached.

Good to know: All years for which you can prove that you lived in the property yourself count double toward the calculation of the holding period. This reduces the tax burden significantly faster when selling your primary residence.

Surcharges and Reductions on Real Estate Gains Tax

Unlike many other cantons, Vaud does not impose any direct surcharges or deductions on the real estate gains tax based on the holding period. However, longer holding periods are favored with a lower tax rate.

Sample Calculation of Real Estate Gains Tax in the Canton of Vaud

Calculation of real estate gains tax following the sale of a property after 12 years of ownership and an increase in value of 200,000 Swiss francs in the Canton of Vaud:

• Sale price: CHF 1,000,000

• Purchase price: CHF 800,000

• Deductible investments: CHF 50,000

• Other deductions, e.g., real estate agent fees: CHF 5,000

= Taxable gain: CHF 145,000

Tax rate for a 12-year holding period: 13%

→ Effective real estate gains tax in the Canton of Vaud: CHF 18,850

For comparison: For the same property, but with a holding period of only 9 months: Tax rate for a holding period of less than 1 year: 30%

→ Effective tax amount: CHF 43,500.–

In what cases is the real estate gains tax deferred?

In certain cases, the real estate gains tax in the Canton of Vaud may be deferred. This applies, among other things, to:

• an inheritance, an advance on an inheritance, or a gift

• transfers of property between spouses, such as in the context of a division of marital property.

• the replacement purchase of an owner-occupied residence, provided that the proceeds from the sale are invested within a reasonable period of time in a new property in Switzerland that is also owner-occupied.

In such cases, the tax is not waived but becomes due only upon a subsequent taxable sale.

Important: The tax deferral for a replacement purchase applies only to owner-occupied properties. Vacation homes, second homes, and investment properties are excluded. If you have questions regarding the exact interpretation of tax liability, it is best to contact the cantonal tax administration.