Investing in Real Estate abroad

Might get a decent payout if the insurance covers flood damage :wink: But for real, Florida might be risky. Apparently the new hip is investing in large lots in up and coming start up cities in the US.

What are the taxes you need to pay in Switzerland for owning and renting a house abroad?

I know you need to pay wealth tax, but do you also need to pay income tax on the income you receive from renting it?

CH rule is that property is taxed in the canton / country where located for wealth and income tax. So no, not directly taxable in CH. it is considered part of your global wealth and income for calculating the rates so your Swiss wealth and income will be taxed at a higher rate.
If you have a mortgage, for CH tax calculation the debt and interest is allocated prorata between your canton and country where the property is based on assets in each location

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At least in Zurich you get taxed both as wealth and as income, even if the flat/house is empty (4.25% of the declared value in that case).

Can you elaborate? I have been deducting the full mortgage amount from my wealth and the full interests paid from my income, but they haven’t yet finalised my tax return(s).

The principle is that if you own a house in CH, you can’t take a mortgage on that house to buy a holiday home in the south of France and be left with zero taxable wealth in CH. So they allocate debts and interest based on assets in each location. Movable assets are taxed in CH.

Example: House overseas worth CHF 100k with mortgage 80k, interest 4k/yr. Assets in CH 900k. Other taxable income in CH 100k/yr

Assets are 90% CH vs 10% France. Mortgage and interest are allocated for CH taxes accordingly =>Taxable wealth in CH 828k taxed at the rate of 920k.
Taxable income in CH 96.4k (100-90% of 4k interest) taxed at the rate of 100.25k (*)

(*) To calculate the rate for income tax they count global income. If the overseas property is not rented they will calculate a deemed rental value e.g. 4.25% of value so 4.25k. Global income = 100 + 4.25k deemed rent - 4k interest = 100.25k.

I understood the same rule applied everwhere in CH. Are you sure they are taxing the overseas wealth and income and not using them to calculate the rates?

It might be that for the wealth the amount is only added to compute the rate, but I am pretty sure the income is added to my overall income. Anyway I plan to do the tax return on time this year (last famous words) and I’ll double check.

Thanks a lot for the info!

And what about capital gains tax? If you sell your house abroad will you be taxed in CH for the gains or follow that other country’s tax regime? I would expect the latter but would be good if someone could confirm that.

Also, I think that renovations in your house abroad if documented and value preserving can be deducted from your income. Does anybody has experience/knowledge on that? If this is true and capital gains taxes are not levied in CH I guess this is huge since one could potentially buy older units, renovate them and assuming sold at least at purchase price + renovation costs, can benefit entirely from the tax deduction (of course taking into account that other country’s tax regime)


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This all depends on double tax agreements between the country of investment and the country where you live.

Also, some countries limit the stuff you can deduct from your income if you are not resident there


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The principle applied in CH is that real estate is taxed where it is located.

Correct. CH authorities assume it is taxed in the other country and it is not taxed here.

This is not correct. Following the principle the renovation relates to the overseas property so you don’t pay capital gains in CH and you can’t deduct the cost to improve the overseas property from CH taxes either

If there are maintenance costs (not improvements) these are deducted from rental income for the purposes of calculating your global income. The overseas rent and maintenance will not be taxed in CH since only your CH sourced income is taxed here, but your global income is used to calculate the tax rate applied to your CH sourced income.

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Ok thank you both, this makes sense actually


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Well I am sending them all the bills (also Ikea receipts) I paid to renovate a house abroad. In the ZH software the costs were deducted not only from the (imputed) rental income but also from my overall income and I really really hope they accept the deductions.

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In the ZH software is there a recap « allocation inter-cantonal » or similar ?

In the GE software this exists: I see my global income and deductions and also how these are allocated by the tax authorities between Geneva, other cantons and other countries to determine the taxable income in each.

I’ll check when I do the next tax return

I am considering to buy a field in France from my uncle, build a house on it and rent it.

I am looking at a SCI creation (kind of real estate simplified company).
It lowers down the tax to 15% instead of 20+7.5% and allows to deduct way more charges.
But knowing that you then have to pay income taxes on every dividend/salary you will take out from the company (Around 30%)
 It does not make much sense anymore.

Unless I’m missing a key advantage to own real estate abroad though a company instead of doing it in my own name.

If you own more than 10% of the SCI then it’s called a qualified participation (participation qualifiĂ©e en Francais) and you benefit from a reduced taxation rate on dividend distributions.

If you create a SCI, you should not forget the creation cost of the company (one time cost) and also the annual statement (reoccurring accounting cost).
After you will have to choose the revenue tax or the corporate tax. On the long run, the second option maybe the best to accumulate rent instead of distributing but you will pay more taxes when withdrawing the cash from the company or when you will terminate it.

Is it even possible to create and SCI with a single owner? I alwasy thought ot have understood that an SCI needs at least two owners/participants.

You can own 99% and have 1% to your spouse or parents.

I want to buy 500sqm land right beside my 2 cousins in Bosnia. The seller wants 8k EUR which is fine for me. I plan to build a house on it in 10-20 years. As I have a Bosnian passport too, there won’t be any issues.

Are there any general pitfalls?

The things I see :
-laws about land acquisition from residents abroad without the intention to move in, which might prevent you to buy some land (or some type of land)
-check the zoning plan (if something like that exists in Bosnia), and there are risk of changes
-in 10-20y, a lot of stuff can change, especially if the plot is empty and unused (basically you can be seen as that evil speculator who just let stuff sit unused, waiting for the price to rise). Or suddenly the government decides to build a highway, powerplant or anything else next to that place.
-suddenly you could become taxable in Bosnia as well, which might not be a lot of money, but an administrative nightmare
-depending on the level of services already present, you might need to check necessary maintenance (roads, water, electricity etc.)

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