Value of a property abroad in tax declaration after renovations

Real Estate
1

Since many years I have been declaring the same value (~200K) for a property I own abroad and the (ZH) tax office has never complained, even though priced have been going up in the area. The same is true of a property I own in CH, were the tax office itself told me to be valued at 70% of the purchase price, now probably more ~50% of the price I could sell it to (maybe this will change soon I heard, anyway I work with the assumption that they will tell me when to change it).

I now I spent a good amount of money renovating this place abroad (almost 100k) and will add the bills to the declaration as deductions. The renovation added a bathroom but otherwise mainly fixed things which were long overdue (e.g., new kitchen, new windows of the same type of quality, electricity system etc…).

One question would be: how do I decide what bills were value preserving and which ones were value adding, given that I don’t have any such distinctions in the actual bills?

But mainly I wonder: even if I only did value preserving interventions, today’s flat with new kitchen/windows/floors/walls/electricity system obviously would sell for more than one year ago, when in need of renovations, should I change the value of the flat in the declaration? How would I pick a new value?

Opinions/experiences?

2

I think the expectation is that value of property is updated at certain frequency. However since value is always arbitrary and the real value is difficult to quantify unless someone actually puts property on market, it might be wise to check if local authorities publish any sort of market value rates and if they have changed them in recent years.

3

I would split the costs between value adding and non-value adding. The tax authorities have a guide for this.

Then simply deduct the deductibles and add to the value of the property the value adding.

4

I submitted each renovation bill item with a percentage for value preservation between 10% and 100%. Tax people accepted this transparency.

If you don’t renovate, a property will slowly lose value, hence value preserving intervention help a home keep its value. But even with all the value-adding things, I would not change the value of a home without a proper appraisal.

5

But clearly if I spend 100k in value-increasing renovations they won’t automatically translate in 100K value increase.

6

Ah true. In that case, just don’t raise the value at all.

7

Which is also not right, somehow. I fear one day I might sell the place, make a ton more money than what I have been declaring over the years, and the tax office would fine me for not updating the value better…

8

Yes, those rates exist but they are averages. A flat might just be facing in a different direction or be at a higher floor or simply be freshly renovated (my case) and the value would be higher.

9

Well if someone buys a flat for X when the market average was 100

And now market average is 400

I think it would not be wrong to assume that X needs revision. One can do it with proper valuation or just apply some correction factor.

However keeping it to original value can lead to questions at some point.

10

Well, Swiss house values have stayed ridiculously low for decades and that value is directly taxable unlike for foreign real estate.