but you did have it, you owned a property and you were renting it out, and you got rental income. it just happened to be the case that the person you rented it to is yourself
that maybe sounds ridiculous but to me it makes a lot of sense since it removes a housing market distortion that otherwise occurs, where for example two people might benefit from swapping homes (renting from one another). Without the imputed rent this arrangement would result in additional tax owed and therefore may not be economically feasible
The tax was bullshit, but it was quiet low. I could more than neutralize it with the debt interest deduction. A simple negative carry trade in CHF.USD would cost you deductible 4-5% interest difference and would have given you a tax free 10% capital gain this year.
So yes, I confess, I did vote no. Because, as Falco said:
I read your several post throughout the thread and as I said this approach was very interesting but quite sophisticated for me and I guess for a large majority of the population. I confess that if the NO had won, you were on my next day to do list to learn all about your strategy!!
And the money I used to pay the rent to myself, were already taxed. So why tax them again?
With that in mind, we should pay taxes on the car we buy, like if were leasing them to ourselves?
Honestly, nowhere in the world existed something similar. The concept itself is so counterintuitive and absurd, I’m surprised it wasn’t abolished before.
On the other hand, taxing the real estate property (even the first residence) is something more common in other countries. Hopefully will not become as such in this country.
Short term I will benefit from this however longer term not so sure. For me the breakeven tax wise is at a 1.4% interest rate so not too close if rates go up again. I am also concerned about the longer term effects on the housing market especially on older units…
Hah, think again! In Greece you have imputed income tax if you have a car over 1800cc, a boat, a pool…because…reasons…well, because if you have a >1800cc car you must have a certain income, and must be hiding it, so they tax you preemptively, regardless of whether you earn millions and live in a mansion or you eat pasta 365 days a year and live in a shed, to afford the Ferrari parked outside. Ok, not Ferrari, impractical, but something that’s not dead on wheels anyway
As I commented above in this thread, seeing the level of disagreement on this very financially astute forum confirms my agreement with the Greek constitution that economic matters should never be up for referenda.
As a foreigner with zero interest in RE anywhere, especially not in CH, my interest here is mostly educational, but I agree, imputed anything sounds pretty vindicative and third world to me.
I assume your mortgage is only around 33% of the value of the property. If it was higher, it’s my understanding that banks want you to pay back down to around 33%.
Your debt should not represent more than 65% of your property value at retirement age, which is very different from repaying 35%.
Because at retirement age, your 80% mortgage on purchasing price you haven’t repaid might as well represent 40% of the current property value 20 years later, so you are well within the rules.
That is exactly the point, and you don’t even need to wait retirement age. With the assumption of 4% CAGR for the property price, starting at 80% LTV, you only need 5/6 years for your equity in the house to represent more than 35% of the total. And that is with indirect amortization. So, 5/6 years down the line, you are also free to move your 3rd pillar to any bank of your choice (or just stop contributing if you want so) and KEEP what you have paid till then.
80% LTV and indirect amortization for the most part. I think I’ll have to pay around 8k per year in direct amortization since the max contribution on my wife and my 3rd pillar is anyway capped at around 14k. This should bring the 35% ownership timeline even closer than 6 years.
General thought referendum: This is a very tricky statement. If you start restricting referenda for whatever (however vaild they might be) you will end up with tons of special interest groups making claim on why their topic should or should not be up for referendum. Yes, having (almost) every topic potentially up for referendum will sometimes result in discriminating or unfair outcomes. But in total (this is my personal opinion), referenda lead to overall better laws.
I agree on the principle of freedom, in an ideal world where people are equally well-informed, have critical thinking abilities and are rational, bit like the efficient market hypothesis
Switzerland does it better than most (better than all even?)!
Before, with inputed rental income, (in theory) it did not matter whether you were actually renting your home or not, the same taxes would be levied. There were no tax benefits to either being a renter or owner-occupier. You could freely swap living with another owner-occupier, thus both becoming renters of each other, without any tax consequences.
(Of course, this is all in theory, in practice inputed values were already far lower than actual rents, so there was already a tax advantage to being an owner-occupier.)
But now with the change it is beneficial tax-wise to be an owner-occupier, not just in practice but fundamentally in theory. As a renter you pay the income tax of your landlord on your rent.
If we go back to the people having swapped homes and being renters of each other, by swapping again, they will decrease their living costs by no longer having to pay the income tax (on their rent) of the other.
Oh I got it, so imputed rental value was fair because it implied that it would be tax equivalent to swapping homes between two owners and rent it to each other. If it’s a fairness issue in that very case we could also consider rent as tax-free income. Why homes and not cars, computers, phones?
To sum up, the proof the law was fair is that if I live at my neighbor and vice-versa, tax should be the same as living in my home. Which is really what everyday’s people do.
Well actually that’s also a solution for people regretting rental value income tax. With the new law, swap homes with your neighbor, you’re back to paying taxes on a rent you actually get this time, and get all the perks with it… interest…and so…hum
I’ve never considered it fair or logic but the system “worked” and that’s why I was not so biased against it but I’m surprised how some people find it logic.
Homes are limited due to land being a limited resource. You can always make more cars, computers and phones. I thought the tax was a very good thing from the point of view of: economic rationing of a limited resource; and avoiding distortion between owner occupation and rental.
I’m pretty sure it will happen. The property owners who voted to abolish EmW might come to regret it when the tax raids come for homes some time in the future and EmW is no longer there as a shield.
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to learn all about your strategy!!
