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  #121  
Old 24.01.2016, 21:15
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Re: real estate investing

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I'm sure it can- maybe in Zurich in Geneva. Where I live we've got brains though. As said, great kitchens made here by top local kitchen designers with top notch appliances- and more like 30k than 100k- and none are 'rental' white' either. And if the work is done in stages, you can deduct the max from tax year after year.
Many people would prefer to do the entire refurbishment, before moving into the house, others are happy to live on a building site for several years to save some tax, I know what I would choose to do.
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  #122  
Old 24.01.2016, 21:16
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Re: real estate investing

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Can someone please rename this post to fatmanfilms does not belief anyone can make money from real estate!
don't stress it other than he's being absolutely negative about investing in real estate, he does try to keep on topic now and I got some good points to remember. I guess the fun is to separate the truth from the opinions.
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  #123  
Old 24.01.2016, 21:24
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Re: real estate investing

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Many people would prefer to do the entire refurbishment, before moving into the house, others are happy to live on a building site for several years to save some tax, I know what I would choose to do.
most "bigger" renovations happen in december and january, thus killing 2 years' tax options in 1 go. I guess homebuyers should be conscious of what to buy with regards to this rule.
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  #124  
Old 24.01.2016, 21:33
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Re: real estate investing

Both our accountant and friendly bank managers say they dispair of customers who want to do all the renov at once, rather than take it year by year to get the max tax reductions.
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  #125  
Old 24.01.2016, 21:37
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Re: real estate investing

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Both our accountant and friendly bank managers say they dispair of customers who want to do all the renov at once, rather than take it year by year to get the max tax reductions.
I always thought you disapproved of corporations who maximised tax deductions, but you seem to be in favour for personal taxation. Is this not some sort of double standard?
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  #126  
Old 24.01.2016, 21:50
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I always thought you disapproved of corporations who maximised tax deductions, but you seem to be in favour for personal taxation. Is this not some sort of double standard?
Not at all - totally different, really.
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  #127  
Old 24.01.2016, 22:00
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Re: real estate investing

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Not at all - totally different, really.
Surely tax avoidance is tax avoidance, every body does it & it's totally legal.
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  #128  
Old 24.01.2016, 22:00
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Re: real estate investing

Ways and ways. Our favourite tax avoidance method is being paid in a currency that is falling !?!

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  #129  
Old 25.01.2016, 10:34
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Re: real estate investing

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Member Meloncolie used to sing the praises of home ownership in CH, however her tune as recently changed. If I remember correctly her house is not worth much more than they paid despite spending roughly 40% of the purchase price on renovation.
Well seeing as how my name has been taken in vain I might as well explain a bit further... but please keep in mind that my experience is simply one personal anecdote. And as we all know, one anecdote does not a data set make.

FMF remembers correctly; our house has not appreciated in value since we bought it in 2004, despite spending ca 40% of the purchase price in renovations. So from one standpoint one might say that we are 40% in the hole. Oh, and those renovations were made almost 12 years ago; time to be redoing many of them... so figure in another 10%, maybe more.

I should note that prices actually did rise, astronomically, during the bubble years. At the height of the bubble a neighbor sold his house, exact same house as mine but with less than a third the land I have, for more twice what mine is worth now.

I should have sold the house then. Oh wait... I wanted to, even some years before that. But in years of looking I could not find another house fitting our needs anywhere within a reasonable commute to ZH, and I couldn't sell without having another roof over my head. So much for market timing.

Someone with a less complex household might not run into this issue. But the bone dry market does make timing a sale and new purchase tricky.

One reason our house has not appreciated is that it is a house at odds with the direction our village is going.

My house was built in the 80s, a small house for a normal (1980s) family. But my village no longer attracts normal families who are content to live in small houses, the tone of the village has changed dramatically in recent years. The once-farming village is now filling up with by ZH commuters who want villas.

A few small houses that could be torn down and turned into villas were sold for gazillions simply for the land value- but my house cannot be torn down. Our Quartier is governed by an iron-clad Gestaltungsplan, these small houses must remain 'as is' für immer und ewig, significantly depressing our land value vs freely buildable land in our village. What we have is not what today's buyers in this village want. And few families who want small houses like mine consider this village.

The old real estate adage that it's better to buy a small house in an expensive neighborhood only holds true if that house can eventually be turned into one of the expensive ones.

The only way our properties will appreciate in the near future is if all owners in the Quartier agree to sell in tandem to a developer with enough Vitamin B to break the Gestaltungsplan. And since at our annual meeting the owners cannot even come to an agreement over border plantings, there isn't a snowball's chance of that happening.

So I have a great location, gorgeous views over the Zürichsee and into the mountains, short walk to the train, everything I need nearby, second lowest taxes in all of Switzerland... but a situation that keeps the house from appreciating. (On the other hand, that iron-clad Gestaltungsplan means I might get to keep my gorgeous view für immer und ewig...)

Yes, I have saved a lot of money in mortgage v. rent. My mortgage is currently pennies where I was paying silly expat rent before. But these savings have more to do with my own financial goals with the mortgage vs limited rental options as a furriner with too many dogs. If I structured the mortgage as is typical for a Swiss, or if I hadn't had to pay well over the odds in the rental market, I would not have realized savings to this extent.

Another point that affects the equation: As a US citizen, I do not benefit from our low tax rate, nor do I benefit from the usual deductions that property ownership brings. My effective tax rate remains what it would be in the US, anything I save in CH goes straight to Uncle Sam. Were I not in possession of the little blue book, though, I'd be golden.

Of course that would apply to renting in this village as well as buying. The deductions that come with home ownership are essentially a wash with Eigenmietwert, the real tax savings comes from the low tax rate.

A further point that US citizens should note: Uncle Sam and his IRS henchmen see the sale of foreign property as a currency transaction as well. Here market timing - as in the currency market - can have a significant impact on your tax burden upon sale and thus on the attractiveness of the investment.

All in all, from a purely financial standpoint the house has not been a great investment. Would I have been better off putting it in stocks? Who knows - I've made some clunker investments there too.

But investment issues aside, I still needed a roof over my head. I hated renting with a passion, probably just part of my American DNA. What is the freedom of not having a landlord worth? That's an individual question.


tl;dr: YMMV.

Last edited by meloncollie; 25.01.2016 at 16:41.
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  #130  
Old 25.01.2016, 11:06
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Re: real estate investing

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Many people would prefer to do the entire refurbishment, before moving into the house, others are happy to live on a building site for several years to save some tax, I know what I would choose to do.

Well, yes, as said you are very funny ahaha. If I was a multi-millionaire or had won the Lottery, I might have done. On a UK pension- we'll have fun doing it our way Having tons of space, both in and out- is worth its price in platinum for us. Each to their own.
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  #131  
Old 25.01.2016, 12:23
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Re: real estate investing

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tl;dr: YMMV.
thanks for sharing. yes, these are individual risk factors one needs to calculate before buying. Did you ever do the calculations on savings vs renting?
I mean your house is now not worth 22% more, but how much did you save on rent vs the mortgage in the last 10 yrs?
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  #132  
Old 25.01.2016, 13:01
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Re: real estate investing

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thanks for sharing. yes, these are individual risk factors one needs to calculate before buying. Did you ever do the calculations on savings vs renting?
I mean your house is now not worth 22% more, but how much did you save on rent vs the mortgage in the last 10 yrs?
If you add up the 40% capital loss to the interest, then renting will be a hugely better deal. Interest rates were higher 10 years ago than today.
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  #133  
Old 25.01.2016, 13:21
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Re: real estate investing

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If you add up the 40% capital loss to the interest, then renting will be a hugely better deal. Interest rates were higher 10 years ago than today.
... and then you need to add to the credit side of the ledger the quality of life improvement obtained by modelling the house exactly the way melloncollie wants it. That's worth CHF 562,957, leaving her well in the black.
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  #134  
Old 25.01.2016, 13:36
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Re: real estate investing

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... and then you need to add to the credit side of the ledger the quality of life improvement obtained by modelling the house exactly the way melloncollie wants it. That's worth CHF 562,957, leaving her well in the black.
That would probably equal to the full cost of renting approx 4700 a month.

I recall problems with neighbours so in reality its a debit rather than a credit........
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  #135  
Old 25.01.2016, 13:53
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Re: real estate investing

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If you add up the 40% capital loss to the interest, then renting will be a hugely better deal. Interest rates were higher 10 years ago than today.
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... and then you need to add to the credit side of the ledger the quality of life improvement obtained by modelling the house exactly the way melloncollie wants it. That's worth CHF 562,957, leaving her well in the black.
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That would probably equal to the full cost of renting approx 4700 a month.

I recall problems with neighbours so in reality its a debit rather than a credit........
Last week it suddenly turned into a huge credit.

You see, last year a new vet clinic was built just a 10 minutes' drive from my house. And last week I needed to get the Belltie into an oxygen box with minutes to spare.

So none of the unpleasantness matters anymore, none of the cost, theoretical or otherwise, matters anymore. I may not be any better off financially, but the Belltie is still here, thank doG. So given what is really important to me, that now means my white elephant of a house is suddenly looking like a better investment.

In the end, it all boils down to subjective evaluation of what is important to you, as an individual, now and in the future. In other words: YMMV.

Last edited by meloncollie; 25.01.2016 at 14:10.
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  #136  
Old 25.01.2016, 14:39
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Re: real estate investing

we always go round and round in circles on this topic, its quite funny really. On one side are the home owners, like a sort of medival bunch of Romans ready to charge across the abyss of Finance to shower the other side with facts on house appreciation and rental savings. On the other side stands, normally, Mr FMF, a sole soldier of the stockmarket, but armed to the teeth with price changes, memories of house price crashes and a couple of real missiles in the form of the goodle and apple shares he snapped up for peanuts (well, depending on how big your peanuts are)...

And we always end up never agreeing because it all depends what will happen in the future which we cant tell.

All I can add beyond the normal guff like its nicer to live in a house than a flat blah blah is that the UBS house price report is out for 2016 and if you havent read it, get over to UBS.CH and take a read. the message is that big rises now are out, but.... there's no evidence of a big crash coming because the fiscal measures put in to tighten the net of lending are beginning to bite.

So no one I think is expecting the double digit humdinger rises we had before, but if they just tail off and dont drop, well then its back to the hilltops, for renters vs owners for as long as EF keeps running...
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Old 25.01.2016, 15:10
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If you add up the 40% capital loss to the interest, then renting will be a hugely better deal. Interest rates were higher 10 years ago than today.
Why would it be 40% capital loss? it was about 4% accumulated inflation since 2004. Cashing out a home is not easy, but it also shouldn't be done if conditions are unfavorable, but you seem to be hung on the idea of stocks and just throwing in huge random numbers as "loss". They didn't lose anything and they didn't win either - on appreciation. They won on mortgage, won on standard of living, won on independence from the owner compared to renting. And they could've put the savings on rent-vs-mortgage into a stock fund if you like. With renting you would've had zero of this and their rent would be probably up in the sky by now in Schwyz.

Comparison: not buying a lotto ticket does not mean you just lost 500 million dollars.
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  #138  
Old 25.01.2016, 15:18
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Re: real estate investing

Said it so many times before, the joys of owning a historical building with lots of space and land, no neighbours too close, where you can do what you want, when you want, keep horses, and feel great- is priceless.

No figures you can present about investment, blablabla can ever make a difference to us - and each to their own- thank goodness. At my age, investments are irrelevant- and I just love skiing, including spending my kids inheritance.
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  #139  
Old 25.01.2016, 16:10
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Re: real estate investing

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we always go round and round in circles on this topic, its quite funny really. On one side are the home owners, like a sort of medival bunch of Romans ready to charge across the abyss of Finance to shower the other side with facts on house appreciation and rental savings. On the other side stands, normally, Mr FMF, a sole soldier of the stockmarket, but armed to the teeth with price changes, memories of house price crashes and a couple of real missiles in the form of the goodle and apple shares he snapped up for peanuts (well, depending on how big your peanuts are)...

And we always end up never agreeing because it all depends what will happen in the future which we cant tell.

All I can add beyond the normal guff like its nicer to live in a house than a flat blah blah is that the UBS house price report is out for 2016 and if you havent read it, get over to UBS.CH and take a read. the message is that big rises now are out, but.... there's no evidence of a big crash coming because the fiscal measures put in to tighten the net of lending are beginning to bite.

So no one I think is expecting the double digit humdinger rises we had before, but if they just tail off and dont drop, well then its back to the hilltops, for renters vs owners for as long as EF keeps running...
What you must remember that over 90% of experts agreeing with themselves always underperform & are surprised when they are caught on the back foot most of the time.

All markets are a voting machine in the short term & a balancing machine over the long term. I see Swiss salaries hardly change in 25 years, so no reason to assume property values can double & double again, which most people believe will happen as its normal.

Just visited a clients rented pad in GE, he just moved into an even nicer penthouse than he had before, views of mountains on both back & front terraces. It's also just been finished to his spec, so not very different to buying. He did look at buying, he owns a house with his ex wife, however the deposit equals nearly 8 years rent so he does not think it's worth buying.
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  #140  
Old 25.01.2016, 16:37
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Re: real estate investing

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Said it so many times before, the joys of owning a historical building with lots of space and land, no neighbours too close, where you can do what you want, when you want, keep horses, and feel great- is priceless.

No figures you can present about investment, blablabla can ever make a difference to us - and each to their own- thank goodness. At my age, investments are irrelevant- and I just love skiing, including spending my kids inheritance.
I think this is exactly the attitude to have when you are buying to live in (including the bit about spending the kids inheritance ).

When buying to live in, as long as you are not levered to the hilt (which most banks won't allow anyway), worry less about appreciation and depreciation and instead make sure that you'll be happy to live there for years to come.
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