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  #181  
Old 25.01.2009, 17:57
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Re: [Ins and Outs] Buying Property in Switzerland

I just thought of another question. When you pledge your pension, does the bank have "access" only to what was there when it was pledged, or can they in one fell swoop swallow say another ten years worth of contributions should you default down the line and they make a claim? If that is the case you should benefit in interest rates by the increased amount of collateral you have backing a decreased amount of unsecured loan as the years pass shouldn't you?

Thanks for your time
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  #182  
Old 04.02.2009, 16:00
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Re: [Ins and Outs] Buying Property in Switzerland

Had a visit with the UBS a few weeks ago and she gave us the following example breakdown of mortgage (more or less), based on pledging our pension fund (and a purchase price of 500000). This is based on memory btw.

Property 500000
Notary, land registry etc (5%) 25000
Total 525000

Deposit (min 5% to cover notary etc) 50000
Total mortgage 475000

1st mortgage at 2.94% (fixed 5 year) 13965 p.a.
2nd mortgage (min 1% p.a.) 4750 p.a.
Anciliary costs (~1% p.a.) 4750 p.a.
Total 23465 p.a.
Monthly costs 1955

The second mortgage can be paid indirectly via 3rd tier pension scheme and is used to pay off the 2nd mortgage after 19 years (in my case). The advantage being it is tax-deductable and will accrue interest whilst in the scheme. You can also choose to pay more than 1% into this 3rd tier (max ~13000 p.a. for a couple, I believe) and thereby reduce your residual 1st mortgage at retirement. The 5% for notary etc you have to come up with yourself, since you are pledging, and not cashing in, your pension. When asked how much of our pension we should pledge, she replied all of it, but since it is only taken as security, you still have full pension benefits on retirement. I think the total amount has to be at least 20% of the purchase price, but can't remember exactly what she said. I also can't remember if the indirect amortisation payments also included life assurance. I've got a feeling they do, in fact, but you are welcome to correct me.
We'll probably have a chat with a few other banks to see who has the better rates. I know, for example, that Postfinance is lower.

edit: sorry the figures aren't aligned, they were in the post window
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  #183  
Old 04.02.2009, 16:37
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Re: [Ins and Outs] Buying Property in Switzerland

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1st mortgage at 2.94% (fixed 5 year) 13965 p.a.
2nd mortgage (min 1% p.a.) 4750 p.a.
Anciliary costs (~1% p.a.) 4750 p.a.
Total 23465 p.a.
Monthly costs 1955
Anciliary costs (~1% p.a.) you don't need to pay to the bank, they are just for repairs if they are needed.

The libor rate is quite low now. Interest rates are heading down too.
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  #184  
Old 04.02.2009, 17:24
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Re: [Ins and Outs] Buying Property in Switzerland

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Anciliary costs (~1% p.a.) you don't need to pay to the bank, they are just for repairs if they are needed.
Sorry yes, I should have made that clear. We've been looking at some 4.5 - 5.5 room appts where monthly charges of 350.- to 400.- are quoted. This is paid by all owners for the upkeep of the building etc
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  #185  
Old 05.02.2009, 10:40
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Re: [Ins and Outs] Buying Property in Switzerland

Another thing, I know 3a contributions are tax deductable, but are mortgage interest payments also? I'm sure the info is here somehwere, but I couldn't find it.
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  #186  
Old 06.02.2009, 21:22
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Re: [Ins and Outs] Buying Property in Switzerland

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Another thing, I know 3a contributions are tax deductable, but are mortgage interest payments also? I'm sure the info is here somehwere, but I couldn't find it.

Yes both are deductable, but to make it fair between home owners and non-home owners they also tax you on the deemeed rental value based on the purchase price. This amount gets added to your taxable income.
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  #187  
Old 19.02.2009, 15:19
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Re: [Ins and Outs] Buying Property in Switzerland

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Another thing, I know 3a contributions are tax deductable, but are mortgage interest payments also? I'm sure the info is here somehwere, but I couldn't find it.
hi PaddyG

i see you're in fribourg. does the Fribourg canton have software for calulating taxes? i think most of them do, I am familar with VD and ZH but know very little at all about all of FR! Download it if it exists, play with it and be amazed at what you can say is actually tax dedutible.

hth, bill
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  #188  
Old 19.02.2009, 15:25
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Re: [Ins and Outs] Buying Property in Switzerland

Apparently Kanton Fribourg has the highest taxes of any Kanton in CH - at least it did last year when we were interested in buying an apartment there.
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  #189  
Old 19.02.2009, 16:00
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Re: [Ins and Outs] Buying Property in Switzerland

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hi PaddyG

i see you're in fribourg. does the Fribourg canton have software for calulating taxes? i think most of them do, I am familar with VD and ZH but know very little at all about all of FR! Download it if it exists, play with it and be amazed at what you can say is actually tax dedutible.

hth, bill
Yes it does, I just need to set aside some time to play with it.
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  #190  
Old 23.02.2009, 13:59
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Re: [Ins and Outs] Buying Property in Switzerland

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Apparently Kanton Fribourg has the highest taxes of any Kanton in CH - at least it did last year when we were interested in buying an apartment there.
also the worst unemployment assistance. not a very nice place to live financially!

bill
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  #191  
Old 12.05.2009, 18:37
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Re: [Ins and Outs] Buying Property in Switzerland

We are now in the contract signing stage with our potential future home and we received a draft of the Kaufsvertrag (prepared by a Notar) from the realtor.

In reviewing the contract we noted that the terms are slightly more in favour of the Bauherr. What is our best course of action - should we discuss this directly with the Notar who prepared the draft contract, or should we engage someone else independent to review this for us?

My concern is not so much with what's now IN the contract as we can always discuss and pick it apart if we want to... rather I am more concerned about the languages that should be in the contract but are not.

Do someone also know if we engage an independent Notar how much would it cost in a simple review like this?
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  #192  
Old 12.05.2009, 19:01
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Re: [Ins and Outs] Buying Property in Switzerland

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We are now in the contract signing stage with our potential future home and we received a draft of the Kaufsvertrag (prepared by a Notar) from the realtor.

In reviewing the contract we noted that the terms are slightly more in favour of the Bauherr. What is our best course of action - should we discuss this directly with the Notar who prepared the draft contract, or should we engage someone else independent to review this for us?

My concern is not so much with what's now IN the contract as we can always discuss and pick it apart if we want to... rather I am more concerned about the languages that should be in the contract but are not.

Do someone also know if we engage an independent Notar how much would it cost in a simple review like this?
Who is the Notariat who drew up this contract? It should be an independent lawyer on the payroll of the community you are buying in.

You will likely be paying half the Notoriat fees, so employing another seems unnecessary to say the least. If you don't like something in the contract start with the Notariat who sent it to you. If you are buying in a development, it may well be there are dozens of similar contracts, by the way...
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  #193  
Old 12.05.2009, 19:15
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Re: [Ins and Outs] Buying Property in Switzerland

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Who is the Notariat who drew up this contract? It should be an independent lawyer on the payroll of the community you are buying in.

You will likely be paying half the Notoriat fees, so employing another seems unnecessary to say the least. If you don't like something in the contract start with the Notariat who sent it to you. If you are buying in a development, it may well be there are dozens of similar contracts, by the way...
FYI - Notar or Notarin is the person, while Notariat refers to the Notar's office

While it wouldn't be so difficult to discuss what we don't like in the contract, it is a different story if there are certain clauses (i.e. acceptance, payment hold back, etc etc) that should be in the contract but isn't. We are buying in a small development (only 3 units) and so far we are the only buyer so there are not comparable contracts to speak of.
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  #194  
Old 15.05.2009, 14:29
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Re: [Ins and Outs] Buying Property in Switzerland

I have a question.

I am looking to buy an apartment when I move this October. I have checked and the monthly payments look lower than the rent costs!

I don't have cash for a deposit though. But my parents are willing to give me the 20% for what would be a 20% share in the property. Not an official 20% but just between me and him that when I sell the property I will give 20% of the value of the property.

So if he transfers this 20% over to me will that be taxed or anything or do I get to keep that full 20%?

Also what banks are there in Switzerland? I know UBS and credit suisse. What others could I check out?

THanks!
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  #195  
Old 15.05.2009, 15:51
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Re: [Ins and Outs] Buying Property in Switzerland

The mortgage rate in Switzerland is low at the moment and you would be able to offset the interest paid against Swiss income tax. However, unless you take a fixed rate mortgage, you will have to be prepared for your monthly payments to rise, possibly quite steeply. A snag with the fixed rate product is that it has a time limit and then the fix starts again.

As regards help from others, I was advised by a Swiss accountant to take the money as a loan so as it is not taxed in the wealth tax box. The Banks (I used UBS) don' worry about these loans from family because they know they are not secured on the property, so you're not penalised in terms of what the Bank will lend.

I feel the biggest negative you have to take into account is what will happen if you wish to move on. Swiss property is very often difficult to sell quickly and the Banks take the view, it appears to me, that a year is pretty quick!

So on balance most Swiss rent, certainly until they have stability in their careers and family life.

All this is my opinion and if you go ahead with a purchase you need to take advice from a Swiss accountant. Good Luck.
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  #196  
Old 15.05.2009, 16:17
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Re: [Ins and Outs] Buying Property in Switzerland

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All this is my opinion and if you go ahead with a purchase you need to take advice from a Swiss accountant. Good Luck.
Good advice. Had I have known how much maintenance costs would be and the tax burden increase beforehand, I wouldn't have bought here. Our deemed rental income is almost as much as my part-time salary. I don't fancy having to continue paying tax on it into retirement.
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  #197  
Old 15.05.2009, 16:25
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Re: [Ins and Outs] Buying Property in Switzerland

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The mortgage rate in Switzerland is low at the moment and you would be able to offset the interest paid against Swiss income tax. However, unless you take a fixed rate mortgage, you will have to be prepared for your monthly payments to rise, possibly quite steeply. A snag with the fixed rate product is that it has a time limit and then the fix starts again.

As regards help from others, I was advised by a Swiss accountant to take the money as a loan so as it is not taxed in the wealth tax box. The Banks (I used UBS) don' worry about these loans from family because they know they are not secured on the property, so you're not penalised in terms of what the Bank will lend.

I feel the biggest negative you have to take into account is what will happen if you wish to move on. Swiss property is very often difficult to sell quickly and the Banks take the view, it appears to me, that a year is pretty quick!

So on balance most Swiss rent, certainly until they have stability in their careers and family life.

All this is my opinion and if you go ahead with a purchase you need to take advice from a Swiss accountant. Good Luck.
Is it not possible for when I leave to rent the place out?
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  #198  
Old 15.05.2009, 16:30
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Re: [Ins and Outs] Buying Property in Switzerland

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Is it not possible for when I leave to rent the place out?
Those without a C-Permit that are non-EU need permission.
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  #199  
Old 15.05.2009, 16:40
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Re: [Ins and Outs] Buying Property in Switzerland

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Those without a C-Permit that are non-EU need permission.
So it's fine for EU citizens?
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Old 15.05.2009, 16:50
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Re: [Ins and Outs] Buying Property in Switzerland

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I am looking to buy an apartment when I move this October. I have checked and the monthly payments look lower than the rent costs!
You need to be careful when you do this kind of comparison. Sure, with the current interest rates you can get something like +/-1% interest rate (3-month libor + 50-70bp), so it looks cheap. But to be fair, you should rather look at a 10-year rate (comparable risk) and you also have to factor in the monthly running cost (for an apartment 300-800 depending on the size and building) and potential repairs. On top of that, property taxes are substantial - expect another couple of hundreds a month.

The main reason for buying that I can see is simply that you can get much better properties.
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