There are 12 cantons in which property taxes are levied on houses, apartments, and other properties. In six of these cantons, property taxes are only levied by some municipalities. The terms used to describe property taxes varies between cantons. In every case, property taxes are levied on an annual basis.
Like wealth tax, property tax is a tax on the value of your property. But unlike wealth tax, you cannot deduct mortgage debt.
At the end of the day, taxation is often arbitrary and unfair.
It’s about what’s practical, and what gives you as little unwanted distortions as possible while still raising enough money and applying the burden on those that can handle it.
Income tax for instance is very practical, but the distortion effects can be pretty nasty: a doctor which reduces their working hours because they do not feel working more makes sense due to progressive income tax is a very bad outcome for society.
In that sense, the inputed rental income was pretty good. It was about correcting the distortion effect of income tax on renting, and had thus no unwanted effects on its own. It was also progressive since it added to (the progressive) income tax, unlike for instance a property tax. And it mostly targeted people who had the means to pay it.
If it’s a fairness issue in that very case we could also consider rent as tax-free income.
We could of course, but tax money needs to come from somewhere. Is increasing income tax rates or VAT a better source of funds? I’m not convinced. Wealth tax? Maybe.
Why homes and not cars, computers, phones?
I agree it’s pretty arbitrary, but it’s also about what’s practical. Phones would be hard to track and bring peanuts. Cars would not necessarily be a bad idea, but it would be just too unpopular. Also as Phil said, homes are a limited resource, so encouraging fair use of it by not penalising renting (and thus not biasing against people moving when it would suit them) is a good thing in my books.
The arbitrariness is not unique either. You and your neighbour doing each other favours is all good and well, but if you and your neighbour are in the trades, and you exchange renovating the kitchen for the bathroom, then suddenly it’s tax fraud.
People living in a Baugenossenschaft would in that case have to pay partial imputed rent value – there’s no income tax paid by Genossenschaften.
As owner of an older house, for now it seems I’ll be off budget neutral, though with new Zurich house values I guess I might win out in the end (current mortgage 40% of valuu).
I agree: tax is arbitrary and unfair and very biased by definition.
And I don’t feel skilled enough to tell which one is a better option, I voted accordingly.
As unfair and illogical it looks to me I felt it was part of a working system, and the fact people voted doing their own personal calculations without taking the global picture into account might have side effects everyone can regret.
However, I can’t grasp the logic of “it’s very simple you rent to yourself so you pay taxes, see, it’s very fair”. I saw it more like a progressive tax property, despite the fact property tax DOES ALREADY EXIST in many places in Switzerland (@PhilMongoose@DrGEERemoval of imputed rental value - #364 by JEPG ).
In my German-speaking community, there is a widespread belief that the imputed rental value is an unfair tax. And whenever this referendum came up, it was always about finally abolishing an unfair tax. There were never any further discussions about other topics that also come with it.
I think in German-speaking Switzerland it was simply a blunt “Abolish imputed rental value? Awesome, finally! ” at every Stammtisch without giving it any further thought.
I’ve read an article (from UBS I believe) a few days ago, evaluating that new construction and recent appartement/homes would see a price jump of +13%. Not sure how realistic it is..
Form what I can see, over the last 20 years, real-estate prices rose by 3.12% CAGR in Switzerland and 4.3%/4.5% in Geneva/Zurich (source: Realadvisor). And during the same period, inflation was at 0.57% yearly on average (Source: Claude).
So after inflation it’s been well above 1% for some time already.
This situation has existed in many cities across the world for a long time. Often it IS sustainable if there is a market for external buyers where affordability is not limited by local wages. Think London, Vancouver, Manhattan.
I would not be surprised, given the scarce housing situation, if cantons like Zurich bring in an empty home tax or under-utilized home tax now that EmW doesn’t provide this ‘nudge’.
Sure. It is possible. but Zurich is not really London or Manhattan. I think rental yields in Zurich city are not really interesting anymore and this should put upside cap.
But you are right if new buyers keep showing up, prices can keep going up
I know but that’s how I find some logic myself, this is about taxing your RE in the end, because I will never ever understand the logic behind imputed rental income of something I use and own (and not rent to or from someone), be it a home or something else.
Tax does not have to be logic though, it has to feed a common system, also supporting the economy somehow, and maybe it worked better that way. Time will tell.
Property tax exists in Switzerland in some places, in addition to the imputed rental income, though.
Exactly as you would expect it: percentage of property value, not related to wealth or income, no deductible.
There are 12 cantons in which property taxes are levied on houses, apartments, and other properties. In six of these cantons, property taxes are only levied by some municipalities. The terms used to describe property taxes varies between cantons. In every case, property taxes are levied on an annual basis.
Like wealth tax, property tax is a tax on the value of your property. But unlike wealth tax, you cannot deduct mortgage debt.
There are 13 cantons that do not have property taxes. These are Aargau, Appenzell Ausserrhoden, Basel-Landschaft, Glarus, Luzern, Nidwalden, Obwalden, Schaffhausen, Schwyz, Solothurn, Uri, Zug, and Zurich. The canton of Basel-Stadt does not have a property tax for private individuals, but does levy a property tax on properties owned by other legal entities.
I find find the ‘two people own the house they live in vs two people rent from each other’ not very easy to understand although it has been repeated here a couple of times.
I prefer the following: Person A holds a one-million-CHF house and pays no income tax. Person B holds one million CHF in stocks and pays income tax on dividends.
Just for the fun of it, and because I really don’t get it: Person A generates no income with that house, so there shouldn’t be an income tax on it. They do have opportunity costs on their capital and face market risks. Person B generates income, instead and are taxed on it. Ok, B also faces market risks, but then capital gains are not taxed, either.
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