Property buying expenses: one-off and recurring

Real Estate
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Prospective buyer of an appartment for the purpose of staying in it. I am trying to get a good handle on all costs, one-off and recurring ones from buying and staying in an owned appartment. I am listing here some I could research and would appreciate corrections. Of course, these are only estimates but I try to err on the side of caution and round up.

One-off

  • Advance payment: min 20% of home value
  • Mortgage deed: 0.3% of mortgage value
  • Notary costs: 1% of home value
  • Land registry: 1% of home value
  • Connection fees (electricity, gas, etc…): 2000 CHF
  • Building energy certificate: 700CHF

Recurring

  • Mortgage payments
  • Building insurance costs: e.g., against fire, floodings etc. I know it depends on property value, but any indicative value? e.g., for a 1m CHF property
  • Renovation / maintenance costs: 1% of property value per year
  • Utilities cost (electricity, gas, oil): 400CHF / month (assuming an appartment ~120mˆ2)
  • Property tax: 0.3% of property value per year

Pretty sure I am missing stuff. Would appreciate input from recent experiences.

3 Likes
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Thanks, I’m also looking for a similar overview. Other questions:

  • how is the property tax calculated? Is it the same in any canton?
  • What are the possible tax deductions? I know about renovations and mortgage payments. Are both of them fully deductible?
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  • Eigenmietwert
  • Opportunity cost of capital tied up in the property
  • Opportunity cost of having to hold reserves to deal with property or having a more conservative portfolio (maybe holding reserve cash, less aggressive portfolio etc.)
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You mean the imputed rent? I understand the valuation methods differ widely. Same goes for notary cost or land register in @chrispappas12 question.

Where I live, imputed rent is 3.5% on the calculated value of land and building (1% above a threshold). Building value includes an annual 1% depreciation.
The calculated value is some 2/3 of the market value. For wealth tax, they can also use an estimated value. like 70% of the quoted purchase price.

On the income side, the mortgage is fully deductible, and renovations as long they don’t have a value-enhancing character. There’s also flat-rate option, which is 20%.

2 Likes
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Thanks for your answer!

I’ve tried to make a google sheet about the expected earnings coming from an home purchase compared to renting.

Here is it.

I didn’t consider one-off expenses like home purchases taxes and expenses.
Let me know if you think it is reasonable, you can play around by changing the numbers in the left columns.

I considered:

  • home purchase
  • rent
  • deposit
  • morgage interest
  • renovations expenses
  • % of renovations that are tax deductibles
  • Imputed rent/rent (if you want to simulate a scenario where you rent the apartment you can set this to 100%)
  • inflation
  • home value increase
  • tax on capital gain
  • marginal tax rate
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Not sure why you consider the inflation on your deposit an expense. I also find strange to consider the equity appreciation as revenue.

1 Like
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Inflation to me is an expense because the real value of your deposit gets reduced. I only apply it to the deposit because that is the only money you are investing.

Wasn’t sure how to consider the equity appreciation, how would you do that?

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Is that for your place, or something to rent out? What’s the capital gain tax about?
At least for a new-built, the maintenance won’t be 1%, inititally. On average it’s a propably a good estimate.

The result makes sense, either way. Once you also consider opportunity cost of your equity, the result can / will change more in favor of renting, depending on your parameters, but not by a life-changing amount.

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Great topic, I’m trying to make such a list myself.
On the topic if assurances, how much does an apartment or home owner pays per year? I am learning that there is a Cantonal base insurance in most cantons, bit I can’t get an example of yearly cost. Is it a percentage of the value insured? Does anybody have a rule of thumb for the insured vale and how does it relate to other home values (fiscal one, market one etc)