So we just moved into the house that we bought. It's got everything we wanted, nice private garden, quiet sunny location close to schools, train, motorway, shops, 20 minutes from Zurich, bedrooms for all, built out attic, large cellar, even has the bomb shelter (aka wine cellar). The surrounding countryside is beautiful, surrounded by woods, farms and castles within biking distance.

Details:
Price: 685K
Down payment: 325K (used my entire pensionfund)
House: 19 years old, solid, in immaculate condition, fully renovated.
Interest rate on the loan: 2.35% for 5 years, resulting in 675 CHF / month...we have been paying 2600 CHF in rent for an apartment for the past 14 years!

With pensions getting only 2% interest, and their viability in question, I just think this is the better way to go. My pension was racking up only 541 CHF per month in interest...by rolling over into the house we save 2000 in rent. OK, some tax penalty for the Eigenmietwert, but we still come out ahead. What's the catch here? Why doesn't everyone do this?

Congrats! When is the housewarming?

I think I highlighted the answer to your question

Congratulations!!
No catch!

We also remained at the same rent (first to a person, now to a bank) of about 1500 chf per month when moving from a 40 year old 3.5 room middle flat with balcony, to a brand new 5.5 room apartment with garden.

Not all are lucky/hard working/clever enough to save the deposit required. Thats all.

I think that there is also a tax advantage...



(not sure is there will be a capital gain for us, but hey, you cant have everything )

You don't get it...the HOUSE is now my pension fund, instead of a faceless financial institution who have their own best interest in mind, and will tell me how much I am entitled to in 15 years (assuming they are still solvent). I have just shifted my assets from an anonymous 3rd party who is doing God-knows-what with my money, to a direct investment that I have direct control over, and can enjoy immediatly at the same time. Like having your cake and eating it too. Swiss real-estate has had a rock solid appreciation trend over the long term, small but stable.

Congrats! Hope the house meets your expectations also in the long run

I would be int'ed to know how ur investment turns out in couple years' time after all owner costs, taxes, and other liabilities

One disadvantage is Eigenmietwert. If you are paying tax at about 30% (marriage penalty)it is better to keep the interest payment and Eigenmietwert balanced. It came as a nasty surprise for us as we were happily dreaming about deducting interest payments.

Down payment is for sure a factor for many, however some don't buy house thinking they can gain more profit on other investments specially outside CH.
Not to mention you need to live in it for several years to notice the profit after all the costs involved with the purchase and move,....

I think the point is clear: You shifted your assets and it looks like a very smart thing to do. However, not everyone has those assets in the pension fund as high as you did... I for example do not (but I assume I worked far less years than you did...)

Congratulations!

Wishing you every happiness in your new home.



(One of the first things I did after buying our house was laundry. On a Sunday. And I chose not to clean the lint filter immediately afterwords. Gosh, that felt good. )

Congrats to the house! It's a great feeling!

The catch? Well, non really even though the "savings" would be somewhat lower than the 2000 CHF. To your mortgage you also have to add the cost for renovation which is usually assumed to be 1% of the value of the house per year. And the Eigenmietwert that you mention. And the "loss" from alternative investments you could have made from the 325 KCHF (which you also mentioned).

But generally, at the end of the day, you usually come out slightly "cheaper" buying.

Another catch is of course the fact that you become less mobile and that you have more work when something breaks down.

That's a great news. Hope you have a nice garden (mow is cool) and a vegetable garden (cooking is cool with your own stuf...)


Have fun with your new home, sweet home

So have a few kids..

we used to pay 40k tax per year, and now pay 6k.

You can choose to be positive or negative about this..

Noone is going to nag him about pin holes in the wall, and tap filters that need replacing when they move out!

Tax is about 55K. How many kids one needs to bring it down to 6K?

Advantage could be having a family basketball team but I doubt about any financial gain as a full time nanny will offset any savings in tax and then some!

kids are taxing!

There are tax and other financial implications for people based on their country of citizenship. For Americans, you must pay tax on taking the amount from your pension in US as well as well as calculate currency gain (If any) based on all that you paid into it into pension fund.

Additionally, when you buy a house,(or anything significicant) you have to buy it in swiss francs but IRS only looks at USD. So if you save up for years, you have to calculate what was the value of the money you bought the house with (if you are using money from your bank account or pension fund) The Accountant said, that every time you got paid you should keep track of what was the US dollar rate. So if you add that over multiple years to get the down payment, then you have to say what was the buy rate in USD you bought the house in. So over years, my average for downpayment was 1.3 swiss francs to dollar. I buy the house now, and the buy rate is using 1.02 swiss francs to the dollar. I then need to report this currency gain to the IRS on all the money I use to buy the house, at the time I bought the house.

Then the basis of the house is set at the rate on the day I buy it. So if I buy house at 700000 today and USD 1.02 then I bought a house for 686000USD. If dollar drops to .97, the house is said to be sold at 721649. I have a tax gain of $33649 even if I sell it for the same price I bought it in chf.

It still can be worth it, but it is also a financial risk.

Congratulations on buying your house.

You don't get it. Many of us don't have anywhere near that in pension funds.

Oh sorry. I have been working here for 23 years, guess that's a lot more than most.

I bet quite a few people (I could name a couple off-hand myself) who have been earning here for 23 years haven't got that much either.
It's not really what a person earns anyway, it's what they get paid for doing their job.

Mind you, I think it's great if anyone wants to buy property and then finds the means to do so.

I really hope you enjoy your house. I'm glad that you told us about it.
Good luck for the future.

That's a useful post Karl, but where did you find a house for 685K? Is it a standalone house?

Everything I looked at recently is at least 1 million and I can only find apartments for this price.

Congratulations on your house!