If you are buying a house in Switzerland, it is important to know that there are additional costs associated with homeownership, on top of the asking price, mostly in the form of taxes. The additional taxes and fees you pay vary depending on the value of the property, which canton it is in, and what your real estate agent charges. This page gives an overview of the types of taxes, costs and fees you may be liable to pay.
Taxes and fees when buying a home in Switzerland
Owning a house in Switzerland isn't only about paying your mortgage and home utilities. There are several other taxes, costs and fees that come with buying your own home:
- Estate agency fees
- Imputed rental value tax
- Wealth taxes
- Property taxes
- Property transfer taxes
- Property gains tax
- Home insurance premiums
Estate agent fees
For the role they play in property purchase transactions, real estate agents charge a fee to both buyer and seller. These fees cover the cost of listing the property and other services the real estate agency provides.
The exact fee varies depending on the company, the value of the property, and the location, but is normally somewhere between 3 and 8 percent of the purchase price. Bear in mind that VAT may be added on top of this.
Imputed rental value tax
Imputed rental value tax in Switzerland is one of the bigger costs associated with owning a home and is something that is rather unique to the alpine nation. It is designed to ensure a tax balance between tenants and homeowners.
In a nutshell, anyone who lives in their own home in Switzerland must pay tax on what is known as the imputed rental value of said home. Essentially, this is the potential amount the homeowner could make, were they to rent out the property. Imputed rental value is treated as income for the purposes of taxation and is taxed as such in your tax return.
Imputed rental value is calculated based on the value of your property and other aspects like its age, location and amount of living space. Tax authorities then consider how much it costs to rent a similar property. Finally, this amount is then capped at somewhere between 60 and 70 percent of the rental value (depending on the canton) to calculate the imputed rental value.
However, if you own your home with a mortgage, you can also deduct any interest you pay on your mortgage from your taxable income, as well as some maintenance costs and value-maintaining renovations or conversions. In many cases, these deductions might actually be higher than the imputed rental value itself.
Wealth tax
When you own your own home, you may also be liable to pay the wealth tax in Switzerland. In Swiss tax returns, property is counted as a valuable asset and counts towards the wealth tax threshold, along with all your other assets. Wealth taxes in Switzerland amount to somewhere between 0,1 to 0,5 percent of the total value of your assets per year.
Property tax in Switzerland
Property tax in Switzerland (also known as land and real estate tax) is a charge levied by some cantons, towns and cities on the value of a property. This tax is levied by cantonal and local authorities and is payable by the owners of all homes in their locality, including landlords.
Bear in mind that the cantons of Aargau, Basel Land, Solothurn, Zug, Glarus, Schwyz and Zurich have chosen not to levy cantonal property taxes. While some areas of Switzerland choose to forgo municipal property taxes, very few do. On average, these taxes amount to between 0,5 and 1,5 percent of a property’s taxable value a year.
Property transfer tax
Property transfer tax is a tax payable when houses and land change owners. It is charged as a percentage of the sale price - in most cantons, it is 1,8 percent.
The way that you are charged differs by canton. In most cantons, it is charged by either the canton itself or your local council (Gemeinde). In the cantons of Aargau, Schaffhausen, Zug, Glarus, Uri and Zurich, property transfer tax is not charged directly but as an ownership and registration fee. This can range from a few hundred to a few thousand Swiss francs. Canton Schwyz has no property transfer tax or registration fee.
Different cantons have different rules on who pays the property transfer tax. The usual practice is that the purchasing party pays 100 percent of the real estate transfer tax, but in some cases the buyer and seller might work out an agreement to pay 50 percent each, or some other ratio.
Property gains tax in Switzerland
If you decide to move out of Switzerland or change address and sell your old house, you will be charged property gains tax on any profit you make from the sale. This is charged at the cantonal and local levels and is based on the overall profit you made when selling your house, and how long you have owned the property.
This tax is calculated by working out the difference between the property's worth when you bought it and what you sold the property for, minus the total cost of any renovations or building work carried out while you owned the property, plus other costs directly related to the purchase and sale, such as notary and land registration fees, or real estate transfer taxes. This profit is then taxed based on how long you have been resident in the property.
Owners that have lived in their homes for long periods of time usually pay significantly less tax when they sell compared to those who resell their homes just a few years after purchasing them. For example, in Canton Zurich, property gains tax is halved if the owner has been in the house for 20 years or more.
Bear in mind that if you purchase a new home in Switzerland using the entirety of your profit made on selling your old house, this tax is not charged.
Home insurance in Switzerland
Alongside property taxes, all but four Swiss cantons - Geneva, Appenzell Innerrhoden (excluding the district of Oberegg), Ticino and Valais - require homeowners to take out some form of building insurance before purchasing property. For more information about this, see our guide to home insurance in Switzerland.
How to reduce a homeowner’s tax bill in Switzerland
When considering whether you should purchase a home in Switzerland, you may want to minimise the costs and tax burdens associated with home ownership. Here are some ways in which you can reduce the total tax cost of owning a house:
- Renovation work on properties can be tax-deductible to both rental value tax and property gains tax.
- Income from subletting can reduce rental value tax.
- Opting to co-own a house splits the value of the house between each owner when determining wealth tax.