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Old 03.07.2015, 16:26
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Question: Home buying

I am an US expat with a recently acquired ( <1 year) B permit. I would love to buy a home in Switzerland - preferably within 1 hr train ride outside Zurich. I have many reasons for doing so, the primary being that I wish to move my liquid assets out of the U.S. Dollar and into the Swiss Franc. Purchasing a home will do that for me. I will likely be able to buy the home outright.
The question(s) I have are - is it possible to be a U.S. Citizen with a Swiss B permit to own a home? What are running cost ( heard that mentioned in other posts- insurance, property taxes, association dues, utilities,)?
Thanks in advance for your input.
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Old 03.07.2015, 16:48
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Re: Question: Home buying

There are many threads discussing this very thing, a bit of browsing will reveal all.


One thing you should know as a US citizen:

Uncle Sam views the sale of a home overseas as a currency transaction as well as a property transaction. This could hurt depending on where the USD/CHF goes. To give you an idea, I bought our home in 2004. If I were to sell today at the same CHF price I would still show a currency gain - on paper - with the resulting tax liabilities.

Not much of an issue if you plan on holding on to your Swiss house until you leave feet first. But if there is even a glimmer of a chance that you are not here forever (and remember as a non-EU citizen you have no intrinsic right to be here, as some of my long term settled friends have found out) be aware of the currency issue.

On the CH side, do make sure you understand the punative tax if the property is sold in the first X years (X varying by canton, as per usual).

Re: Paying for the house outright - As a US citizen there is, individual situation dependent, not all that much tax benefit to keeping a Swiss mortgage. One benefit to carrying a Swiss mortgage as a US citizen is to be able to offset the Eigenmietwert - again, how much of an benefit that is for you depends on your financial situation.

FWIW, in some ways I sort of regret owning the Swiss house, as while it made sound financial sense to buy rather than pay rent, it is proving a cumbersome ball-and-chain as I look to the future outside of Switzerland. Getting rid of it will be expensive, and likely a nightmare.

As always, YMMV.

Last edited by meloncollie; 03.07.2015 at 16:59.
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Old 03.07.2015, 18:09
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Re: Question: Home buying

Thanks Meloncollie,
Yes, the currency exchange is important.
I imagine I will need allot of research to do to see if all tax/financial exchange number work out.
My biggest hurdle now is to know if having a B Permit is enough to be able to purchase.
I am willing to take some risk as I would convert to a rental if needed. My major issue is to get out of the greenback and into the CHF . I believe the USD is in for a major drop and the likely fallout will prevent money to be moved out of the U.S.
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Old 03.07.2015, 18:47
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Re: Question: Home buying

Someone with a C-permit can definitely purchase property for any reason (to live in, to rent out etc.) anywhere in Switzerland no matter the nationality.

People on a B-permit or non-resident foreigners have some restrictions depending on the nationality, the use of the property and the canton.
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Old 03.07.2015, 20:11
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Re: Question: Home buying

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Someone with a C-permit can definitely purchase property for any reason (to live in, to rent out etc.) anywhere in Switzerland no matter the nationality.

People on a B-permit or non-resident foreigners have some restrictions depending on the nationality, the use of the property and the canton.
The restrictions on the purchase of property by foreign nationals are described here: https://www.ch.ch/en/real-estate-foreign-national/
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Old 03.07.2015, 20:19
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Re: Question: Home buying

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Not much of an issue if you plan on holding on to your Swiss house until you leave feet first.
Unless you decide to give up your US citizenship, then it counts as if it were sold.

Tom
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Old 03.07.2015, 21:36
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Re: Question: Home buying

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Unless you decide to give up your US citizenship, then it counts as if it were sold.

Tom
Only to the IRS.
If you never again set foot on Uncle Sam's lawn, ever, you don't need to worry.
Yet.
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Old 03.07.2015, 22:54
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Re: Question: Home buying

I would not rush into anything; you haven't been here that long so very early days. Firstly you probably would need to buy outright because it's very unlikely a Swiss bank would give you a mortgage a) being an American and b) only having a one year B permit.

Secondly, what are you going to do if the permit isn't renewed? If you don't have a job or are independently wealthy enough not to need to work you simply won't have a permit that allows you to stay here. Owning property doesn't give you a residence permit. If you can't financially support yourself then out you will go.

You would not be able to rent the property out as it has to be your main residence as a B permit holder.
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Old 04.07.2015, 18:15
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Re: Question: Home buying

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The restrictions on the purchase of property by foreign nationals are described here: https://www.ch.ch/en/real-estate-foreign-national/
This one

"If you wish to build on the land that you have purchased, you must do so within one year."

seems very implausible to me. I doubt anybody could go from scratch to building start within a single year. Getting the building permit alone takes at least three months in a near-ideal case.

It would effectively mean that a bad-willing prospective neighbor can have you forcibly sell the property by raising objections, he just needs to make sure the case takes long enough to get a final verdict.

But BTT:
OP, you don't need to buy a house in order to convert your USD to CHF.
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Old 04.07.2015, 18:56
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Re: Question: Home buying

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There are many threads discussing this very thing, a bit of browsing will reveal all.


One thing you should know as a US citizen:

Uncle Sam views the sale of a home overseas as a currency transaction as well as a property transaction. This could hurt depending on where the USD/CHF goes. To give you an idea, I bought our home in 2004. If I were to sell today at the same CHF price I would still show a currency gain - on paper - with the resulting tax liabilities.

Not much of an issue if you plan on holding on to your Swiss house until you leave feet first. But if there is even a glimmer of a chance that you are not here forever (and remember as a non-EU citizen you have no intrinsic right to be here, as some of my long term settled friends have found out) be aware of the currency issue.

On the CH side, do make sure you understand the punative tax if the property is sold in the first X years (X varying by canton, as per usual).

Re: Paying for the house outright - As a US citizen there is, individual situation dependent, not all that much tax benefit to keeping a Swiss mortgage. One benefit to carrying a Swiss mortgage as a US citizen is to be able to offset the Eigenmietwert - again, how much of an benefit that is for you depends on your financial situation.

FWIW, in some ways I sort of regret owning the Swiss house, as while it made sound financial sense to buy rather than pay rent, it is proving a cumbersome ball-and-chain as I look to the future outside of Switzerland. Getting rid of it will be expensive, and likely a nightmare.

As always, YMMV.
The OP will not know your past history in posting on the benefits of home ownership, it's only a few years ago (2-3) that you were claiming you could not afford to rent the house you lived in, in other threads you spoke of both huge rises in prices & later about huge falls in prices, again in the fairly recent past.

If you rent you know the final cost, if you buy you can easily under estimate the cost of ownership by 500k or more. Something to bear in mind as a foreigner where home ownership is not common & liquidity in the housing market is non existent.

If the rules were tightened as to who can purchase property, in line with rules 15 years ago, you could see falls of 30-60%. Remember in CH, people don't get annual pay raises, just a fraction of a percent inflation rise. There is no reason that prices will rise if earnings don't rise too.
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Old 04.07.2015, 19:15
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Re: Question: Home buying

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This one

"If you wish to build on the land that you have purchased, you must do so within one year."

seems very implausible to me. I doubt anybody could go from scratch to building start within a single year. Getting the building permit alone takes at least three months in a near-ideal case.

It would effectively mean that a bad-willing prospective neighbor can have you forcibly sell the property by raising objections, he just needs to make sure the case takes long enough to get a final verdict.

But BTT:
OP, you don't need to buy a house in order to convert your USD to CHF.
From my readings on the forum here it seems pretty difficult to "object" to any building projects enough to hold them up. And I guess it also depends on what they mean by start building. A case in point, a few years ago down in Donatyre, the next village down the road from us, a new apartment block was being offered for sale. Doesn't seem as if anyone or at least enough people were interested because the only thing that got built was the parking spaces. So, they built on the land within one year, and I assume still can build the apartment block in the future if demand makes it possible. There's been no further activity on the site so I'm making the assumption that it hasn't been sold on to someone else. Of course why they couldn't build it in the first place is a bit of a mystery as there seems to be plenty of demand for housing around here.
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Old 05.07.2015, 08:47
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Re: Question: Home buying

I am also investigating opportunities for expatriating some USD to Switzerland; but am focusing more on Swiss real estate funds, where the investments are all within CH. These funds provide stability, low risk (legal limit of 33% leverage), reasonable dividends/distributions, capital growth (at least so far) and no currency transfer exposure. Also, with diversification across cantons and real estate type (residential, commercial), they can protect against single points of failure one gets by buying one house or flat. Also, they may offer the advantage of zero Swiss income tax, depending on how they are invested in real estate. But this may be offset by a higher US tax. I am just learning about them at this point and so don't understand all the ramifications.

Why do you think the dollar is primed for a big drop? It is currently in a rising trend against most currencies, including the Franc, more or less, mainly due to the expectation of rising interest rates in the US. My motivation is that the 40-year laverage trend for the dollar/franc pair is continuing downward, and my plan is to stay in Switzerland permanently (got the coveted C-permit in May!).
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Old 11.07.2015, 13:21
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Re: Question: Home buying

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what are you going to do if the permit isn't renewed? If you don't have a job or are independently wealthy enough not to need to work you simply won't have a permit that allows you to stay here. Owning property doesn't give you a residence permit. If you can't financially support yourself then out you will go.

You would not be able to rent the property out as it has to be your main residence as a B permit holder.
That's an interesting point/situation though. What would happen exactly in that case?
A person owns the property, lives in it, their permit is revoked/not renewed. On paper (for the Gemeinde and for the Migrationsamt) they depart, the property becomes a foreign-owned 'holiday' home. Potentially though, the foreigner, if they have enough income, could continue living in it all year round, albeit technically they are an illegal immigrant as they are without a residence permit. Presumably they wouldn't be liable for income tax either as they have become a non-resident foreigner. What is the likelihood of the Gemeinde finding out? Could the person be deported out of their own home? Couldn't the person just 'wander back again'?!
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Old 11.07.2015, 14:00
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Re: Question: Home buying

Even non resident owners have to pay wealth tax and notional rent tax (Eigenmiet tax) on the property. The rate depending on world wide assets and income. Caveat, I only have experience of GR and ZH.
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Old 11.07.2015, 14:37
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Re: Question: Home buying

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That's an interesting point/situation though. What would happen exactly in that case?
A person owns the property, lives in it, their permit is revoked/not renewed. On paper (for the Gemeinde and for the Migrationsamt) they depart, the property becomes a foreign-owned 'holiday' home. Potentially though, the foreigner, if they have enough income, could continue living in it all year round, albeit technically they are an illegal immigrant as they are without a residence permit. Presumably they wouldn't be liable for income tax either as they have become a non-resident foreigner. What is the likelihood of the Gemeinde finding out? Could the person be deported out of their own home? Couldn't the person just 'wander back again'?!
Best would be to apply for refugee status. You could surely paint a plausibly black picture of life back in the USA to qualify.
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Old 14.07.2015, 10:35
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Re: Question: Home buying

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What is the likelihood of the Gemeinde finding out?
100%.

Tom
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Old 14.07.2015, 12:35
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Re: Question: Home buying

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100%.

Tom
For example by neighbours reporting it?

Or would there also be some sort of checks to see how much electricity is used? I remember reading something to that extent when someone's (a high earner) place of residence was contested (for financial reasons they had been keeping it in a Gemeinde with much lower tax).
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Old 14.07.2015, 13:06
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Re: Question: Home buying

neighbours will report. or gemeinde will know anyway if it is a small place.

on top of that, you will either have rental revenue to be taxed by the gemeinde, or EMW to be taxed by the gemeinde.

both will require registration at the gemeinde so they will know if nobody is registered there.
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Old 14.07.2015, 22:06
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Re: Question: Home buying

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neighbours will report. or gemeinde will know anyway if it is a small place.

on top of that, you will either have rental revenue to be taxed by the gemeinde, or EMW to be taxed by the gemeinde.

both will require registration at the gemeinde so they will know if nobody is registered there.
So for an 'empty' property owned by a non-resident (no longer a resident), the non-resident receives simply a bill for EMW directly or still goes through a more complex tax declaration procedure? Is this the only tax I would still have to pay in Switzerland?

Or more specifically, if I am a now resident owner occupier and I decide to move out of Switzerland officially, notify my departure to the Gemeinde and not rent my flat out, then officially the flat becomes empty. I can keep the correspondence address at the flat in Switzerland for the Gemeinde's EMW bill.
My Gemeinde/Switzerland in general will then assume that for tax purposes I am non-resident and am paying taxes on my Swiss income (whatever the source) in my new country, so they won't tax my Swiss income at all, is this also correct?

Last edited by plumtree; 14.07.2015 at 23:01. Reason: adding a phrase
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Old 14.07.2015, 23:41
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Re: Question: Home buying

I have not read the rest of the replies so someone else might have already mentioned this, but in Switzerland it generally does not make fiscal sense to purchase a house outright, you will pay way too much tax.
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