Thoughts on contracting debt for the sole purpose of reducing taxes? (e.g. buy a company, real estate etc.)

Taxes
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1929 had a 86% drawdown for the S&P500, in USD (might have been less or more when considered in CHF): https://www.visualcapitalist.com/sp-500-market-crashes/

The next mother of all drawdowns could be more than that. Your overall net worth is constituted of other assets, though, (at least your 2nd pillar and it seems you may be drawn toward adding some real estate) so it might still be acceptable for you.

Edit: changed the link and the impact of the drawdown from 83% to 86%. The previous website being Canadian, it’s possible the drawdown was calculated in Canadian dollars.

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RE could be a good option for you. I bought twice a old building (2016, 2022) with a lot of renovations based on two fiscal years and paid 0.- taxes after deductions. You could do the same every 2-3 years depending on your financial situation while investing your rental income in the stock market.

1 Like
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Buying the property with debt can also reduce wealth tax if your canton values property for tax purposes much lower than market value.

My home is valued at 1/6 of the 2020 purchase price for tax purposes. So you could pay 240k deposit, take 960k mortgage and have a value of 200k and reduce your wealth by 760k for tax purposes.