It does depend. Here imputed rent is 3.5% - 4.25% on the tax value. Given the tax value is discounted it’d be some 2.5% - 3%. Assuming 80% mortgage, you’d “break even” at some 2.0 – 2.4% interest.
Currently, you can to better than that, but it’s a nice problem to have.
Just a comment: Those 5% are really high Oo
sure, this is why I stated “(to be checked based on individual situation)”
In my case, the imputed rent is ca. 2% of the market value, so with 80% mortgage my breakeven point would be at 1.6%. I refinanced in 2019 at 10Y at 0.95% (but - when I got the initial mortgage in early 2010 - I had 10Y at 2.7%…)
Really? Mine is not bad, but absolutely not close to imputed rent. Maybe a combination of Zurich’s valuation of house value and low interest rate.
Hello everyone,
I’ve run a detailed simulation for purchasing a CHF 1.6 M property in Geneva and would appreciate feedback to make sure my assumptions and calculations are realistic.
I’m currently renting for CHF 4,400/month (about CHF 52,800/year including costs). My taxable income is very low, which puts me in a low marginal tax bracket (around 15%). I wouldn’t use any pension capital for the purchase. The key financial assumptions are:
Property price: CHF 1,600,000
Downpayment: CHF 300,000
Mortgage: CHF 1,300,000
Mortgage interest rate: 1.5 %
Maintenance: 1 % of property value per year
Amortization: Direct (~1 % of mortgage per year)
Eigenmietwert: Estimated at 65 % of market rent
Property tax: ~0.15 % of taxable value
Taxable property value: ~70 % of market value (Geneva)
For the estimations:
Acquisition costs are about 3% of the purchase price, which comes to roughly CHF 48,000 upfront.
Mortgage interest is CHF 19,500 per year (1.5 % of CHF 1.3 M), tax-deductible.
Maintenance costs are estimated at CHF 16,000 per year (1 % of property value), tax-deductible.
Amortization is around CHF 13,000 per year (1 % of the mortgage), not deductible but builds equity.
Eigenmietwert is based on an estimated market rent of CHF 4,400/month (CHF 52800/year). Taking 65% gives CHF 34,320/year added to taxable income.
Taxable income increase: Eigenmietwert (34,320) – interest (19,500) – maintenance (16,000) = CHF 1,180. At a 15% marginal rate, this means about CHF 177 extra income tax per year.
Wealth tax isn’t relevant because taxable property value (1.12 M) minus mortgage (1.3 M) is negative but this could be slightly positive (I assumed Taxable property value as ~70 % of market value)
Property tax is about 0.15 % × 1.12 M ≈ CHF 1,680/year.
Putting this together:
Annual mortgage interest: CHF 19,500
Annual maintenance: CHF 16,000
Annual amortization: CHF 13,000
Additional income tax: CHF ~200
Property tax: CHF 1,680
Total annual cash outflow: ~CHF 51,900
Net cost after amortization: ~CHF 38,900/year
Current rent: CHF 52,800/year
One-time acquisition cost: CHF 48,000
Overall, ownership looks slightly cheaper than renting, mainly because of the low mortgage rate and the amortization building equity.
I’d love feedback on a few points:
Are these assumptions (especially Eigenmietwert and acquisition costs) realistic for Geneva?
Are there recurring costs I might be underestimating, such as insurance or larger maintenance?
Thanks in advance for any insights
Ahem. Did you notice that imputed rental income was just voted out and is going to disappear probably in 2028?
How would you pass the affordability criteria in this case?
Correct yes but assuming one buys a property now this needs to be considered, no?
Tax except income
Some numbers are wrong:
20% of 1.6 MCHF = 320’000
Mortgage 1’280’000
No, you have to count more: 3.3% is just the “registre foncier”, as you have a mortgage, you’ll have to pay for the “cedules”, count 1.8% of the borrowed amount, i.e. 23’040 CHF then add a few thousands for the notary. Essentially 5%.
As already pointed out, the deductions (interest and works) will only be there for FY 2026 and 2027, after, if this is your first purchase in CH, I understand you’ll be able to deduct a decreasing amount for another 8 years (or perhaps 10?) (max 10k/y for a couple, decreasing linearly for max 10 years).
For your other assumptions I can’t help, no properties in my name in Geneva.
I would advise to really look at how it looks for, say, 10 years, buying real estate is a long term investment.
Tax value in Geneva will be the purchase price.
Property tax is 0.1%. An exemption may apply if the property has the Minergie certificate or equivalent.
For the rental value, did you use the questionnaire from the Geneva tax authorities? I would be more precise that your guesstimate. If the property is already own by someone, ask him/her directly for all the different tax values.
Thanks I will update my estimations!
I have a bit broader thought. Are you sure you are going to stay there next 10-20 years? What is the plan if you need to leave, rent it?
Guesstimation if @Makis4321 is thinking along the lines I am: Greece isn’t looking great long-term, property in Athens appreciates/bubbles like crazy while a) quality of life goes down due to overcrowding (not a new thing, Athens has been overcrowded for 50+ years), b) the countryside gets more and more deserted and property prices reflect that, talking 10X price difference, but it’s a gamble whether people will eventually start to relocate away from big cities and hence catalyze improvements in the countryside. So regardless of staying 10-20 years or not, a property could stay with the children.
CH is robust, we have kids, it’s maybe better for them to get CH property eventually, not just CH passport. My wife is of this opinion given her native Serbia is in a similar situation in many ways. I’d like to leave them transferable assets, not bricks and mortar. Of course I could be wildly wrong!
P.S. I find Ben Felix’s approach to housing even more academic and detached from the real world than his opinions on dividends.
FYI - please have a look here to see how real costs looked like. Similar numbers to yours, but it was in 2021 and in Vaud.
Great question. I asked the same question myself 10y ago and here we are today. Fast forward, still in Switzerland and with 2 kids now.
The answer is yes. As far as we are employed, we will stay in Switzerland for the long term.
Yes spot on.
No plan to go back or invest in the Greek real estate market.
Kids are building their lives here, already speaking French so the plan is to stay here as far as our financial situation and salary allows.
Buying in CH is indeed a very long term investment imho
This is gold thanks!
I will use 5% in my simulations
I think that’s where we differ, I’d like my kids to be abroad because “the abroad” gave me so much in every way, but I do intend to return.
Makes sense. I don’t see us going back. I mean it’s going to be a huge hit no? Financially, educationally, quality-of-life wise, etc.
i only see myself retiring earlier and then maybe yes, going back and living of my portfolio and rental incomes.
Ah yes, then we’re the same (again) 
I too intend that we stay here as long as we’re employed, and until the kids finish higher education, that’s in about 15 years from now. Then I’m off, the first thing will be using my passport to light up my grill. Done enough of travelling since 10 years old.
I thought you were prepared to spend your savings in Coop 