Hi everyone,
In 2023, I was living in Switzerland, Canton Ticino. I need to file my income tax return for that year. During that year, I also purchased two properties in Italy. I only have the bare ownership of these properties, shared with my mother, while the usufruct for renting out the two commercial spaces (one of which is vacant) was given to my father. What should I declare in this case? Will I have additional taxes? I have a B permit. Is there anyone in a similar situation, perhaps with property in another country?
If you only have the “bare ownership” on a property you have nothing to declare in your tax return, it’s the responsibility of the one having the usufruct. At least that’s how I was told when I asked the question to the tax office in ZH.
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This is what I had heard as well, which is why we chose this arrangement. However, I have never had confirmation.
I received this through a gift from my parents, if you bought it however and that leads to a decrease of your taxable wealth compared to your tax return of 2022 then you surely need to explain why ^^. In my case since this was a gift no need to say anything.
I think you have to declare the value of the real estate for the wealth tax or I have misunderstood everything about wealth tax. It will only count for satzbestimmend and not for steuerbar.
The valore catastale which I think is what counts here is ridiculously low anyway
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Nothing to declare if you only have the bare ownership
what’s “bare ownership”?
It when you don’t get the fruits. The other person has the rights to the get the rent, to live inside and the litteral fruits from the garden trees.
but you can sell it?
Yes, but the price will be low for obvious reasons
Dismantling property between bare ownership and usufruct is a common pattern to reduce estate taxes in countries having such a scheme. You only transfer bare ownership to your kids while you live and the earlier the better as the value of usufruct depends on your life expectancy (the younger you are the higher it is and the lower the bare ownership is). Upon your death usufruct is extinct and the bare owner becomes the full owner again. The value of usufruct at the time of the bare ownership gift is therefore transferred for “free”. In France you can transfer a lot of assets using that pattern including companies, trading accounts, real estate, etc.
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Exactly, I thought that this way I would also reduce the taxation here in Switzerland. Also, since my mother is a co-owner, theoretically the value shouldn’t be half? Because it’s as if I own half of the property. Who should I ask for more information? And would it be worse if I didn’t declare it? Someone advised me to wait until next year since I will switch to a C permit in a few months to make this declaration.
I was under impression that share in any asset need to be declared under wealth section. However the income from that asset can be declared as Zero if the person doesn’t get any income and other parties are declaring it
The rule is clear, when bare ownership is separated from the usufruct taxes are the responsibility of the one having usufruct. This is specified in the Swiss civil code art. 765 : “The usufructuary must bear the costs of the normal maintenance and administration of the object, the interest on the attendant debt and taxes and other duties for the duration of his or her rights over the object.”
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Thanks. Is there like a formal procedure or document to make something like this or one can just say this person is „bare“ and other is not?
Like anything related to ownership you go in front of a notary, at least in France. I assume it’s the same in CH.
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