Rental income in Switzerland

Hi everyone

I have a tax-related question for real estate investors on the Swiss market: do you own your real estate under your own name (= income tax) or did you create a real estate company to manage your properties (like the SCI in France : Société Civile Immobilière)?

What made you choose one or another option?

Thank you!

We own it under our own name. This way you don’t pay income tax when you sell, only the small specific tax. Be aware that depending on your activity, you can be considered a professional anyway, that means you would have to pay taxes. You also avoid double taxation, eventhough if you own more than 10% of the company you pay less taxes on the dividends. When you do big renovations, it helps you to use the deduction against your other sources of income.

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Be careful if you plan on using a company to own your real estate: the requirements of the mortgage are different. You might have to bring in more money and you have to amortize more of the loan. I don’t think it’s written anywhere but it seems to be the general consensus from what I’ve read…

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Thank you both @triviamaster and @REandSTOCK for your answers - totally making sense. I guess we would need to reach a high amount of real estate investments (and liquidity) to justify a company. Maybe in few years ! :grin:

Thank you for this post. We are exploring the idea of purchasing a property with rental income that would match my salary. Is your point that if I then stopped working and bought the property in our own name I might have to pay AVS and other social deductions etc. on the rental profits? I did not think of this until now… :frowning:

No, only people who are house flipping multiple houses, or who are partner with professional real estate developpers in projects can be considered professional.

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The only reason I heard for having the real estate in a company in Switzerland is that it’s cheaper in terms of inheritance. E.g. you can hand over the shares of the company to your heir w/o them paying capital gain taxes on the properties that might have appreciated in value.

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You don’t pay capital gain tax on real estate when you inherit, at least in your private wealth. When you sell, it is calculated from the point your ancestor bought it.

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The capital gain tax rate decreases with time after purchase. In this case, do you know if the time starts counting from when your ancestor bought it? Or when you inherited from him / her?

Yes, the time is also calculated from the time he bought it.

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Thank you for providing more clarifications to the real-estate topic! I have two more questions:

  1. Is there any difference if your rental investment property is a vacation home vs normal real-estate?
  2. Is there any limitation on foreigners buying properties in CH?

Have a great day!

Afaik there are some towns/cities which limit the allowed days a place is rented out on platforms like AirBNB etc. Not sure how strictly enforced that will be.

Yes, there is a federal law Fedlex

More info here too Buying real estate in Switzerland as a foreign national - www.ch.ch

All properties are not available to foreigners. However, the cantons are more or less strict in its application.

Thank you for your clarification!

Thanks for more data! As I am EU national, it seems that those same rules would apply as for the Swiss.

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