Here in Neuchatel we can deduct all our interest payments against tax. Are you sure it is not the case in Zug?

One of the measures planed is to give tax breaks fro those saving money towards the deposit. This already happens in some K/Cantons I understand.

Being that you can use your pension for the deposit, those tax breaks are pretty much in place.
Interest payments are deductible in all Cantons, removing the tax perk would reduce upwards pressure, it could be applied to new loans only if they want to be kind to existing borrowers. With interest rates so low, they probably don't need to be kind to anybody.

Not sure.. IIRC over 90% of the swiss real estate purchases are done via a bank loan.. With the exception of specific tourist regions, foreigners (EU or not) are not allowed to buy real estate in CH unless it is for their own primary residence. The impact of rich foreigners moving over to CH to live here is picked up by the media (cf the case of rich Kasakh "princesses" buying overpriced money-laundry-villas in Cologny) but is otherwise limited.

This reminds me of the noise real estate agents used to made in Paris about "les riches etrangers qui achetent tout a tout prix" (so hurry up & buy that flat at the asking price before they come and take it away from you).. while in reality, according to stats, they make up less than 1% of the buyers!!

Rich foreigners buy a 'B' permit & pay a fixed amount of tax, it's how they get around the rules, it may be their primary residence but they dont really live here!

This is not new so I doubt this has any impact real impact. They have the money to buy when the prices are low, high, higher or highest.

It's quite new, foreigners used to need a 'C' so they can buy 5 years earlier now. When did it change to 'B' ?
Generally people don't have any interest in buying when the price is low, it's only after prices get much higher does it seem a good investment, same with Gold an anything else really. Only buy what is trendy & thus expensive. If you can borrow someone elses money to gear up then even better.

We were able to buy with B permits more than 5 years ago. I wasn't EC, so we were told we would have to put it in my husband's name to rent it out. We got C permits only a few years after buying.

I'm with magic - a home is a place to live. I don't see it as an investment to make money on the increase in value but I do see it as a way of saving rental costs and allowing you to get something bigger. The same house a few doors down rents for more than 5x what we pay a month in mortgage interest - rents that we couldn't afford to pay forever.

I think the change occured 5-10 years ago.

I'm talking about those Princess types that GVA mentioned buying there way into a permit & a multimillion dollar properties. Kazahak princess don't have EU rights to permits. Anyway, that aspect of life in Switzerland/Geneva is not a new one.

They only have to buy a 'B' permit, as they are non EU they would have to pay agreed taxes here for 10 years before getting a 'C' & being able to buy, I think waiting 10 years would make a huge difference to the people you mention.

Thus the bubble

Some more info, in German:

http://www.tagesanzeiger.ch/wirtscha...story/26153662

http://www.tagesanzeiger.ch/wirtscha...story/22000081

Maybe you could give us a summary or a hint at what it says?

The english edition of the tagesanzeiger ;-)

the translation is far from perfect, but understandable.. (well, kinda of..)

http://translate.google.com/translat...153662&act=url

http://translate.google.com/translat...000081&act=url

"Experts" are warning that the "Eigenmietwert" and the ability to deduct interest-payments from tax is dangerous and leads to a debt-culture.

2nd article basically reveals that the banks have gotten less lenient with mortgages. You can't cash-in your 2nd pillar anymore (or only to a very small percentage).
And if the property you want to acquire is worth less than the price the buyer asks, the bank will tell you to pay-up the difference in cash!

That's always been the case since I've been in CH (so at least 10 years). And people DO pay the difference in cash. (I was born in the wrong family! )

Thanks for the summary.

IIUC banks are taking estimations more seriously (rather than relying on the seller's asking price)

I haven't read all the comments but basically it talks about the proposals of the banks to self-regulate on what counts for a deposit (no more recognition of 2nd Pillar or only reluctantly) and of course worry over a crash.
Some banks seem to be changing policies after over extending themselves and dropping a credit rating like Raffeisen.

The Bund has of course proposals but there's a conflict: if they wish to remove the ability to deduct interest, will they also get rid of the yearly rental saving addition on the tax form, and the high taxes (up to 70%) after selling at a profit if a more expensive property isn't bought with a year or 3? (eigenmietwert/grunstückgewinnsteuer)

Finally the comments worry about concrete Switzerland and having to bail out all those who may not be able to pay if interest rates go up. For some people however as the pension growth is so low and negative after inflation, there's some sympathy for investing in property instead.

In a nutshell the banks here seem to have overextended themselves here like in the USA Ireland Spain etc...and now banks are reluctant to swap the pension money for property they don't value as they then have less money to 'manage' and take hefty commissions from. Some people see investing their pension in a property as taking back control of savings they're forced to make but have no control over until they retire if they remain an employee......

Good call. Was in Walchwil at the weekend right before the SZ border, my friends bought there 3 yrs ago only and it's already doubled....

Unless its more important you can move it for other reasons in new geographies.....