Real estate gains tax: calculation and potential savings for your property explained

If you would like to sell your house or apartment in Switzerland, you need to be aware of a number of legal requirements and regulations in order to make the planned transaction as efficient as possible. One of these aspects concerns the so-called property gains tax, which is levied when a property is sold. In order to familiarize you with how this tax works and to provide you with valuable tips on how to reduce the amount due, your real estate agent Von Poll Oberer Zürichsee has prepared the most important information regarding the property gains tax for you in this article. Read on!

Selling a house or apartment in Upper Lake Zurich: When is property gains tax levied?

Within the past decade, real estate prices in popular locations such as Rapperswil-Jona, Zollikon or the Gold Coast have risen significantly due to high demand. For owners, this means that they generally become liable for tax when they sell their property. Specifically, real estate gains tax is levied on the difference between the sales price and the investment value - the gain on sale is therefore taxed. It does not matter whether the property is developed or undeveloped, or whether there is only partial ownership of the property in question. Even if you wish to transfer your property from your private to your business assets, for example, and a profit is made in the process, the tax is due. Article 12 of the Tax Harmonization Act (SthG) serves as the legal basis for this - if you would like to delve deeper into the legal details, the Von Poll real estate agent team at Lake Zurich Upper will be happy to direct you to an expert lawyer.

The taxation systems in the cantons of Schwyz, Zurich and St. Gallen presented

According to SthG, the responsibility for levying the real estate gains tax lies with the individual Swiss cantons. Thus, different collection methods are used per canton, and a uniform system for the whole of Switzerland does not exist.
In Schwyz and Zurich, the so-called monistic system is used. This states that for every real estate sale with which a profit is made, the real estate gains tax must be paid in the form of a special tax. Whether the property is privately or commercially used is irrelevant. St. Gallen, on the other hand, implements the so-called dualistic system. Here, only private real estate sales are charged with the real estate gains tax, while the sales of companies and legal entities are settled via the income or profit tax. Moreover, in all three cantons the tax rate is exclusively based on the amount of profit generated, a progressive tariff is applied. Thus, the calculation contrasts with other cantons with a proportional tariff, in which the length of ownership also plays a role.

Calculation of real estate gains tax: how to reduce the amount of tax

In order to keep the tax burden due as low as possible when selling your house or apartment, the amount levied by the canton can be reduced by a number of saving potentials.

The first option involves exhausting the tax allowances: these vary relatively widely from canton to canton and can range from a few hundred to several thousand CHF. In St. Gallen, this allowance is CHF 2,200, while Zurich provides for an allowance of CHF 5,000. In the canton of Schwyz, on the other hand, a general tax allowance of CHF 2,000 is granted once a year on sales profits, which can also be applied to the real estate gains tax. To make the most efficient use of these allowances, consulting with a qualified financial and tax expert can prove to be a lucrative decision.

In addition, a number of other factors besides the original purchase price affect the investment costs that are relevant to the assessment of property gains tax. If, for example, you have extensively modernized your property or renovated it to make it more energy-efficient after the purchase and thus brought about a permanent increase in value, this will be added to the investment costs. Costs of change of ownership, such as notary fees, are also chargeable. Also the expenditure of a brokerage payment for your real estate agent in the course of the sale can in this way lower the final amount of the real estate gains tax.

Furthermore, the payment of the real estate gains tax can be postponed to a later point in time. Thus, among other things, no real property gains tax is initially levied in the case of a transfer of ownership in the following form:

• Inheritance, preferential inheritance or gift
• change of ownership between spouses
• property mergers or neighborhood planning (agriculture)

Even if you sell a residential property used exclusively by yourself and invest the proceeds along with the profit to buy a new apartment or house for your own use, initially no property gains tax must be paid.

Would you like to sell your property profitable and comfortable and thereby make the best possible use of the existing leeway for minimizing the real estate gains tax?

Von Poll Immobilien will advise you comprehensively on your plans around Lake Zurich - in a free and non-binding consultation, we will address each of your questions and jointly discuss the next steps in your sales planning.

We look forward to receiving your e-mail at [email protected] or your call at +41 44 211 60 09 to arrange your personal appointment with our real estate agents on Lake Zurich soon!