Property transfer tax

The property transfer tax is generally levied as a legal transaction tax when the property is transferred. Whether or not a profit was made on the property transaction is irrelevant – it can even be due in the case of losses. What is significant, however, is the canton in which the transfer took place.

A high transfer tax can become quite a burden when selling a property. As a result, of course, it can make the residence more expensive and generally depress the real estate market. For this reason, some cantons (Aargau, Schwyz, Zug or Zurich) do not levy a property transfer tax. Homeowners’ associations are also increasingly lobbying for reducing or even eliminating it.

Important to know: Property transfer tax regulations vary from canton to canton.

TAX LIABILITY AND AMOUNT OF THE PROPERTY TRANSFER TAX

The property transfer tax may also be referred to as a tax, a fee or a levy, depending on the canton. In some cantons there are also official transfer fees, which do not replace the tax and are due for various administrative tasks.

In addition, the (various) cantonal tax laws determine exactly who is liable to pay tax on the transfer of property. Purchasers are subject to tax liability in most cantons, but in some cantons, both purchaser and vendor are liable. And in some cantons, the parties to a purchase contract can reach agreement on which of them will pay this tax and in what proportion. In some places, the purchaser of the property is liable to pay the tax, but the vendor is also jointly and severally liable to pay the tax - if the purchaser does not pay it. It is therefore important to make thorough enquiries with your tax authority.

And how high can an individual property transfer tax become in detail? In Lucerne, for example, it is fairly average, amounting to 1.5 % of the sales price. Currently, the highest rate in the country is probably in the canton of Neuchâtel, at a whopping 3.3% of the sales price.

PROPERTY TRANSFER TAX: (NOT) YOUR TYPICAL TAX

Other types of tax that do not replace the property transfer tax may also come into play (depending on the circumstances) when real estate is sold or acquired. Below is a brief thumbnail summary:

1. Property transfer charge. The name of this official charge resembles the property transfer tax but does not represent a tax in the narrow sense. In some cantons, this charge may be payable for various administrative tasks.

2. Real estate gains tax. As the name implies, this tax is only levied if a profit is made on the sale of the property.

3. Inheritance tax, gift tax. These taxes too are levied only in the event of an inheritance or gift.

ARE THERE EXCEPTIONS TO THE PROPERTY TRANSFER TAX?

In some situations, the property transfer tax is not in fact due. Individual cantonal tax legislation can also determine exceptions here.

Depending on the canton, therefore, the property transfer tax is not levied if one of the following scenarios occurs:

• Acquisition by spouse or offspring
• Succession, estate distribution, bequest or advancement of inheritance
• Gift
• Changes in the Land Register due to a reallocation of building land
• Conversion from single to joint ownership

Detailed information is available through your tax authority.

FINAL TAX TIPS

In case of any doubt, a consultation with your tax authority is always worthwhile. There you can learn whether a tax obligation specifically applies in your case and, if so, who is liable to pay it.

Important: You should also be sure to clarify whether you as the property vendor are also liable if the purchaser is liable to pay tax.