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Taxes in relation to real estate: Step by step guide to the situation in Switzerland

In Switzerland, there are some fiscal peculiarities in connection to real estate, which makes the situation in Switzerland different from that in neighboring European countries. Without the advice of a qualified specialist, the complexities of the tax law can quickly become confusing. In order to inform you in the best possible way, your estate agents at Engel & Völkers Residential Switzerland has created this guide, that provides you with an overview of the most important laws and taxes in connection with real estate.

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Sell real estate in Switzerland: Real estate capital gains tax
For all taxes that are incurred in connection with real estate, what applies first is the fact that the corresponding tax is levied "at the location of the matter". This means that you must transfer funds to the canton or municipality in which the property is located. For example, this case occurs when you sell a house, freehold flat, villa or land in Switzerland. If you succeed in achieving a profit compared to the original purchase price, the property profit tax is levied on this profit. The amount of the tax is calculated by the responsible tax office and depends among other things on the respective canton, the profit and the duration of the property ownership. In some cases, the tax may be deferred, such as when you purchase a new property from the proceeds of the sale, or when the property sold is an inheritance. In such special situations, a so-called deferred tax liability arises, which has to be settled when the property is resold.
Even with a transfer of ownership without a specific sale, the tax law knows its own tax: the so-called "hand change tax". Particular attention must be paid here to the individual interpretation of the individual cantons, some of which also provide inheritance or gift taxes. Whether and how much the property gains tax or the duty to change the value of your transaction will be, is something that Engel & Völkers Residential Switzerland will gladly investigate for you within the framework of expert advice.

Taxes related to the operation of the property
Even if you hold a property and use it in different ways, according to Swiss tax law, various taxes apply depending on the individual situation. Thus, any privately owned property, unless mortgaged, is considered an asset to which wealth tax is levied. In addition, there is a property tax, which every property owner has to pay depending on the market value of the property.
In many cases, income tax is added, which is levied at the level of the Confederation as well as by the cantons and municipalities. First and foremost, this includes rental income or leases. But even if you inhabit the property yourself, the tax law requires for the payment of the income tax: it is then based on the so-called "own rental value".
It is then charged on the basis of the so-called "own rental value", since the law assumes that the leasing potential of the property benefits the owner and resident as a so called-income. This own rental value is either calculated by the responsible tax office, taking into account the usual criteria such as the size or location of the property, or it is estimated. Worth knowing in this connection: The rental income also applies to holiday homes, which are not declared as your permanent residence.

Engel & Völkers Residential Switzerland: The Guide to Your Real Estate Matters
The use or sale of real estate should always take place within the framework of a sound budget calculation, the essential part of which is also the tax burden. For this very reason, we advise you - as a real estate owner - to consider a personal consultation by an established service provider, which is characterized by years of experience and a highly qualified team of experts: Engel & Völkers Residential Switzerland. We clarify how much you can expect in terms of tax burdens, and which residential / usage concept is the most suitable for you. In doing so, we provide you with a clear and concise overview of the information that is relevant to your decisions so that you save time and effort on your own research. If required, we would also like to contact our numerous partners throughout Switzerland in order to provide you with the highest possible level of expertise in terms of legal assistance, renovation and restructuring or relocation. Engel & Völkers Residential Switzerland is your trustworthy partner for buying or selling real estate as well.

Do you have questions about the Swiss tax laws in connection with real estate or would you like to arrange an individual consultation? Please do not hesitate to contact Engel & Völkers Residential Switzerland by phone, email or stop by personally for further information without any obligation!

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Engel & Völkers
Licence Partner Zermatt – Valais

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