Selling options to increase income and thus affordability

Investing / Portfolios
1

This is probably quite a long shot, nevertheless worth asking, It also involves a little bit everything — investing, tax, mortgage, gmbh etc. Let me explain.

I’ve been selling options consistently and profitably in the last five years, as a hobby next to my 9-5 job. I have never paid tax on the income generated by this hobby. Similar concepts has been discussed in this thread Option selling while domiciled in Switzerland

Now I am considering buying a second home 3-5 years in the future and I would love to take as much mortgage as possible, hopefully 80%. But I have already used up all my affordability when buying the first home. So the 2nd mortgage is now my main motivation for getting a pay raise in my 9-5 job. Meanwhile I wonder if and how my consistent option trading income can help here.

Idea 1
Find some banks that can approve the 2nd mortgage based on this hobby income. I guess it would be hard. But if you guys have recommendations, please let me know. Very appreciated.

Idea 2.
Start paying tax on this hobby income and thus be eligible for better affordability when calculating 2nd mortgage. This idea to me is a bit dumb because I am paying more tax for a weird reason.

Idea 3
Register a Gmbh selling options as a business, start paying tax on a better rate, and thus be eligible for better affordability when calculating 2nd mortgage after 2-3 years. My gut feeling is that this one is the most plausible one and also most complicated. But maybe I am too naive to know the truth.

So do the questions make sense? do the ideas make sense?

2

Sounds like very high leverage deployed all around. I’d really consider putting limited liability between me and this granade.

What I don’t get is: Apparently this hobby generates a yearly return so big that it could about double your affordability.

If the relative return is high, why buy a second home? Put the captial to your hobby.

If on the other hand it uses a lot of capital, why not size the hobby down a tiny sliver and buy the home at 70%. (And use the rest of the capital in more gainful ways).

There must be some logic in your reasoning, I just don’t see it. Could you expand?

3

If you are considering this additional income as useful to raise your affordability to buy a property in CH, then it must be a good amount and I’d be really interested in knowing more about it, if you are willing to share.

But I also don’t understand the situation clearly from your post.

Are you saying you never declared this income and that’s why you were never taxed on it? Otherwise, if indeed the tax office let you be, you could simply provide your tax return + income statements to the bank to prove your higher income, no?

5

Thanks for the reply and I do appreciate the question/challenge!

Yes it brings more or less the same as my annual income from the day to day job. 2nd home is now just in the plan phase. I guess It will partially be an investment and partially be a vacation home for us, for parents and for airbnb guests. I haven’t gave it a quantitative thought. Just qualitatively, it just serves as another kind of leverage and provides some convenience and incomes.

I tend to consider the “how” questions before “why”. After all, the easier it is, the less reasons to collect for “why”. The harder it is, the more reasons to collect to justify the “why”. So let’s focus more on “how” in this thread.

1 Like
6

Thanks for the reply.

Yes it brings more or less the same as my 9-5 job annual income. I am definitely more than willing to share and to discuss. Maybe in another thread?

And true, it is always declared as capital gain, even though I use the word “income” in this thread.

1 Like
7

Oh wow. That’s exactly what I look for. And did they say why cannot do it in the end?

8

Yes please! Would be interested as well.

9

If the place will generate income in the future you might find a bank willing to simply consider that to raise your affordability. Not sure how common/easy that is though.

10

Being a hobby options short seller as well, this sounds fantastic. May I ask you about the size of your options trading depot and the annual return in %?

Congratulations anyway!

1 Like
11

I would still be cautious about option three. Labor law specifies that having two full-time jobs is not permissible. In your case, if your side activity brings in the same remuneration as your main job, I’m not certain about the consequences, but from a labor law perspective, you might encounter some difficulties (especially with your main employer). Moreover, given the amount generated, I believe you could be subject to the status of a professional investor. Have you taken this into account in the potential calculation of your taxation?