Use pension to finance mortgage

Real Estate
1

Hey folks,

Long time looker, first time poster :slight_smile:

This year I started to slowly look into buying a property in Switzerland. Got some high level understanding, but it is still not clear how to deal with pension funds. My situation is the following:

  • I (M35) have: 2 pillar, 1e pillar and 3a pillar.
  • My wife (F35) has: 2 pillar and 3a pillar.

What is withdrawal tax rate? Does Cookie Not accepted provide right rates? Is amount the only “floating” variable?

What are limitation after money withdrawal from 2 pillar? I saw that you can’t do buy-backs (ok, you can, but you won’t benefit from tax advantages) and disability benefits might be lower.

Let’s assume I will make a buy-in to my 2 or 1e pillar. I won’t be able to use this money for the next three years, right? What can go wrong if I do a buy back to one of my pillars today, buy a property tomorrow and use the pillar to pay back the mortgage in three years (assuming my mortgage allows that)? If I withdraw the money, I should be able to do it again in five years (again, assuming my mortgage allows that)?

2

Usually we do not count on first pillar to buy a property or cashout.
You will get an retirement allowance at your retirement age.
For 2nd pillar, you need to check with your fund manager to know what you can do.
But you mention correct assumption. Do not buyback if you want to withdraw it for your purchase.
After the purchase of you get a bonus or other lump sum you can refund it until you cover the gap to benefit from tax rebate.

If one day you sell your property the notary will refund the 2nd pillar from your withdraw.

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3

Usually we do not count on first pillar to buy a property or cashout.

JFYI 1e is not really first pillar, but special type of second pillar.

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4

Either:

  1. Your pension provider doesn’t allow you to withdraw; or
  2. You can withdraw, but the tax benefits you got on the buy-back are clawed back

#2 should happen but people have raised #1 as a possibility.

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5

Adding related questions here instead of opening new thread. I could not find it answered elsewhere.

  1. If I withdraw second pillar pension to finance mortgage, can my spouse do voluntary buy-in into their second pillar in the following years (without me having paid back money into my second pillar)? Assuming my spouse did not use their pension fund for withdrawal, and have plenty of room for buy-in.
  2. I live in Kanton A and planning to move to Kanton B (buying primary residence there). Which Kanton will deduct taxes if I use my pension to finance mortgage? Which Kanton will “return” me the tax if I pay that withdrawal (or part of) back to my pension?
6

Yes, even the same year.

The one where you are paying taxes in the year of withdrawal :person_shrugging:.

That’s a good one! I think the one taxed you originally, irrespectively of your current domicile.

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Mortgage, DA-1, taxes, and high tax canton