Can’t believe this story, perhaps someone here is able to comment.
My friend has acquired an apartment a couple of years ago, high 6-digit amount.
She has received the tax statement for 2023 where the apartment is valued approx. @ purchase price (minus mortgage).
She retired early so has to contribute to AHV. Given her pension income level the wealth plays a major role in determining what she needs to contribute.
To her big surprise, AHV caisse makes her ‚much richer‘ on paper by adding 45% to the real estate value stated by the tax office!
Being queried, they justify that as being aligned with the law, and will reject the formal ‚opposition‘ she made against the AHV caisse calculation.
AHV caisse:
Comme formulé hier, dans le cadre des cotisations à l’égard de l’AVS, les Offices cantonaux d’imposition appliquent des directives émises par l’Office fédéral des assurances sociales (OFAS).
Cantonal tax office:
L’art. 29 al. 3 RAVS prévoit que, lors de la communication de la fortune aux caisses de compensation, les autorités fiscales doivent tenir compte des valeurs de répartition intercantonales. Le montant de la fortune déterminante communiqué aux caisses de compensation par les autorités fiscales cantonales doit donc correspondre à cette valeur « corrigée » par la répartition intercantonale, y compris pour les biens immobiliers sis dans le canton dont est issue la taxation fiscale cantonale. »
Et le paragraphe 4042 du DIN (Directives sur les cotisations des travailleurs indépendants et des personnes sans activité lucrative) : “La valeur des immeubles s’obtient en convertissant, pour qu’elles soient comparables, les valeurs officielles par le biais des valeurs de répartition intercantonales (art. 29, al. 3, RAVS)”.
Is anyone familiar with this - how can this approach not be qualified as ripoff?
This is unclear to me. Is the apartment valued (by tax authorities) at approximately the purchase price and then she has the mortgage deduction, of course, so that she pays wealth tax only on her equity of the apartment?
Or is the apartment actually valued at an amount that happens to approximately match (purchase price - mortgage), and the taxable net wealth would then be even lower because that’s still before the normal mortgage deduction?
If the latter, the AHV compensating for the massive undervaluation by the cantonal tax authorities makes sense to me.
Or in other words, does the AHV-calculated net worth roughly match her real net worth (using market value for the apartment), so she simply doesn’t get a ‘discount’ that she may have expected? Or is the AHV-calculated net worth actually significantly above her real net worth (ignoring tax value)?
Cantons can widely differ on how they assess the value of real estate. For AHV purpose (but also for some inter-canton deductions) this is renormalized.
For instance the inter-cantonal value is 3x the value assessed by BL or SO.
Maybe they should instead realize that the value for tax is underestimated so they benefit from this already. (It’s just that in some cases the value will be closer to the real value, e.g. for AHV contributions)
It looks like that is what they are doing. For GE, different perhaps to the Swiss-German cantons, there is practically no gap for recently-acquired real estate, I suppose it drifts apart the longer you own it. For AHV they add 45% on top with a broad brush to ‚normalize‘, still leaving an advantage for those that have bought many years ago, while penalizing those that bought recently (she wouldn’t be able to sell anywhere near to what they are assessing).
Wondering wether anyone has challenged this in court. I guess the counterargument is that administrative streamlining trumps fair treatment in every case to some extent.
The circular was done due to from federal court cases so I assume it was triggered by some litigation already.
Maybe people should lobby for their cantonal RE value to be closer to market price and be reevaluated more frequently (then they’d get a 100% multiplier).
It’s a bit surprising that AHV insists to use 45% above market value to calculate AHV contribution
I understand the purpose of the law. But it should also make sense. An apartment bough 20 years back might be alright with such math but a new apartment should not be penalised by such rules
Maybe your friend screwed up by using market value for the tax value? Does she have a official tax valuation for the property.
Normally properties have a tax value that is lower than the market value. For this reason, there is a tax adjustment when calculating AHV.
Treatment varies between cantons, but in my current canton each year I receive a certificate which values the house and also gives eigenmietwert amount. Another canton I lived in capitalized rental values, yet another just took the number I made up.
Or if the valuation is correct, maybe your friend simply overpaid for the property?
Anyway, 145% is normal for Geneva. Be glad she is not in BL where it is 385%!
In Geneva, market and tax value drift apart over time only.
So if you recently bought, you are thrown under the bus by the AHV adjustment and pay based on an artificially bloated value:
Real estate owners are also taxed on their wealth. In this case, what counts is the net tax value of the owner’s real estate. Most of the time, the tax value corresponds to the market value less any debts related to the property. This is determined by the location, nature and method of acquisition of the real estate in question. If it is owner-occupied, the wealth tax can also be reduced by 4% per year of consecutive occupation, up to a maximum of 40%.
This did cheer her up a little! Thanks to everyone for the feedback.
It’s very interessant to see that some cantons are undervaluing the value of property for the wealth tax.
If I understand correctly, a property owner in BL pays only 25% of the “due” wealth tax.
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