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

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

In the Canton of Lucerne, the seller is generally responsible for paying the real estate gains tax. To do so, a separate tax return must be filed within 30 days of receiving the tax return form following the sale.

Lucerne uses the dualistic system. This means that 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 from the sale of business assets or from commercial real estate trading, on the other hand, are taxed as part of income tax.

How is real estate gain tax calculated in Lucerne?

The basis is the taxable real estate gain realized upon sale. This is calculated as follows:

Sale price – Purchase price – Value-enhancing investments – Deductible costs

= Taxable real estate gain

The calculated gain is multiplied by the applicable tax rate before any surcharges or rebates are applied to determine the final tax rate.

Permitted deductions for real estate gain tax in detail

1. Purchase Price

The original purchase price of the property, including all costs associated with the acquisition, is deductible from the profit. These include, among other things:

• Notary fees

• Land registry fees

• Costs for establishing real property liens

• Transfer taxes

2. Value-Adding Investments

This category includes costs for measures that have contributed to increasing the property’s value. Examples include renovations and modernizations, alterations, or additions.

3. Deductible Costs

This category includes costs such as real estate agent commissions and advertising costs for the sale of the property, costs for the physical development of the property, compensation for the establishment or redemption of easements or encumbrances, as well as contributions toward the construction or repair of public infrastructure such as roads, sidewalks, or sewer systems.

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

How much is the property gains tax in Lucerne?

Gains of up to 13,000 Swiss francs are exempt from real estate gains tax in Lucerne. Above this threshold, gains are initially taxed according to the current income tax rate for single taxpayers, as provided for in §57 of the cantonal tax law.

This amount is then multiplied by the tax rate of 4.2 to calculate the real estate gains tax.

Good to know: You can find the table with the current tax rates on the canton’s website.

Surcharges and Reductions to Real Estate Gains Tax in the Canton of Lucerne

Depending on how long the property was owned, surcharges and reductions to the tax amount may be claimed.

If the property was owned for less than 6 years, a surcharge of 10 percent per year applies. For example, the surcharge for a 4-year ownership period is 20 percent. However, the tax may not exceed a total of 40 percent of the property gain—regardless of how briefly the property was owned.

For ownership periods of 9 years or more, sellers benefit from a reduction of 1 percent per year, up to a maximum of 25 percent after 33 years.

Sample Calculation of Property Gains Tax in Lucerne

Calculation of property gains tax following the sale of a property after 12 years and an increase in value of 200,000 Swiss francs in the canton of Lucerne:

• Sale Price: CHF 1,100,000

• Purchase Price: CHF 900,000

• Deductible Investments: CHF 80,000
  Other Deductions, e.g., real estate agent fees: CHF 5,000

  = Taxable Capital Gain: CHF 115,000

Base rate according to the tax rate table: CHF 4,920.75

Multiplied by the real estate tax rate of 4.2: 20,667.15

Holding period: 12 years (= 4% reduction)

→ Effective real estate gains tax in the Canton of Lucerne: CHF 19,840.50

For comparison:

Same property, but held for only 9 months:

Base rate according to the tax schedule: CHF 4,920.75

Surcharge for short holding period = 50%

→ Effective tax amount: CHF 31,000.70

In what cases is it possible to defer property gains tax?

There are clearly defined situations in which payment of real estate gains tax in Lucerne is deferred. These include:

• Transfer of ownership through inheritance, advance on inheritance, or gift

• Transfers of ownership between spouses or partners in registered partnerships, including those related to the division of marital property

The tax is also deferred upon the sale of an owner-occupied property, provided that the proceeds are invested within two years in a replacement property in Switzerland used for the same purpose. This allows homeowners to remain invested in homeownership without having to bear the significant tax burden

Good to know: If the replacement property is located in another canton, the gain deferred in the Canton of Lucerne may be subject to back taxation if the other canton also claims back taxation in a similar case. It is often advisable to clarify this issue in advance with the relevant tax authority.