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Old 04.04.2011, 12:39
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No capital gains tax on real estate - REINVESTMENT

A friend of mine bought a house in Switzerland and sold it after 2 years with a sizable capital gain. He immediately reinvested all the proceeds from the sale into another real estate project in Switzerland. He was informed by the tax authority that he does not need to pay capital gains tax because he used the proceeds to reinvest in another real estate project in Switzerland (house build). Does anybody know how to obtain the EXACT definition of REINVESTMENT for avoidance of capital gains tax on real estate in Switzerland? Is there a government body that one can get in touch to get a precise information so that one can see what kind of reinvestment options are there (through companies, different real estate investment projects, etc.)?
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Old 04.04.2011, 13:10
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Re: No capital gains tax on real estate - REINVESTMENT

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Is there a government body that one can get in touch to get a precise information
Call me crazy but how about the same 'tax authority' that told him he didn't owe any tax?

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He was informed by the tax authority that he does not need to pay capital gains tax
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Old 04.04.2011, 13:39
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Re: No capital gains tax on real estate - REINVESTMENT

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Call me crazy but how about the same 'tax authority' that told him he didn't owe any tax?
Radical. Man
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Old 04.04.2011, 14:49
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Re: No capital gains tax on real estate - REINVESTMENT

He is just rolling over the gain, it's not exempt from tax.
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Old 04.04.2011, 22:16
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Re: No capital gains tax on real estate - REINVESTMENT

This is right the word is reinvestment:
Art. 85 - Remploi


If you sell your house you must have 1. residence there and you buy another one - also as your 1. residence, so you reinvest the money for your own new accommodation than it is the "remploie "..
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Old 05.04.2011, 00:44
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Re: No capital gains tax on real estate - REINVESTMENT

and you need to reinvest another property within 6 months after your previous sale, to avoid the capital gain.
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Old 05.04.2011, 14:34
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Re: No capital gains tax on real estate - REINVESTMENT

Another thing to be careful of...

We are looking to purchase another home and sell our current one. However, it is likely that we will need to do extensive renovation work on any house we find, as the only properties we've seen have all been in a practically unliveable state. This means that we would need to buy house number 2 first, renovate it, then sell house number 1 - and given the vagaries of the gods of building permission and the snail-like pace of the building industry, the time between the purchase of house 2 and the sale of house 1 could be a year or longer.

So - if I have understood the nice man at the tax office correctly (always a big 'if'...) we cannot roll over any capital gains on the sale of house 1 because house 2 would be classed as a second residence, not a new primary residence. We would therefore be liable for the full whack on capital gains tax. (Which in SZ is 30%, plus the additional penalty or minus the rebate, depending on how long one has owned the house.)

Ouch.

Last edited by meloncollie; 05.04.2011 at 15:07. Reason: never mind the last bit...
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Old 05.04.2011, 14:59
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Re: No capital gains tax on real estate - REINVESTMENT

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He is just rolling over the gain, it's not exempt from tax.
What does that exactly mean and what are the benefits if there is no tax exemption?

Are there any capital gains tax exemptions in Switzerland at all?
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Old 05.04.2011, 15:02
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Re: No capital gains tax on real estate - REINVESTMENT

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This is right the word is reinvestment:
Art. 85 - Remploi


If you sell your house you must have 1. residence there and you buy another one - also as your 1. residence, so you reinvest the money for your own new accommodation than it is the "remploie "..
I think he reinvested into a holiday property and bought another apartment as 1st property but the capital gains tax was rolled over into his holiday secondary property.
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Old 05.04.2011, 15:46
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Re: No capital gains tax on real estate - REINVESTMENT

This is the Genava law:

Quelles sont les conditions pour obtenir le remploi ? Les conditions sont les suivantes :
  • vente et rachat du bien en résidence principale dans toute la Suisse.
  • le rachat du bien de remplacement doit s'effectuer dans un délai de 5 ans suivant la vente.
  • la valeur de rachat du bien de remplacement doit être égale ou supérieure à la valeur d'aliénation du bien vendu (remploi total)
  • n'est remboursé que l'impôt relatif au bénéfice qui a été effectivement investi en plus du montant de la valeur d'acquisition du bien aliéné (remploi partiel)
Quels sont les documents à fournir pour établir une demande de remploi ?

Une demande de remploi pourra être examinée sur la base de l'acte notarié du bien de remplacement ainsi que d'une copie du changement d'adresse ou attestation de domicile.
Un décompte définitif d'architecte daté et signé par ce dernier est requis en cas de contrat d'entreprise


It could be different from one canton to another....
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Old 05.04.2011, 18:25
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Re: No capital gains tax on real estate - REINVESTMENT

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This is the Genava law:

It could be different from one canton to another....
Could you email me the link where you got this text as they may be able to give me more information and direct me to other cantons.
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Old 05.04.2011, 18:28
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Re: No capital gains tax on real estate - REINVESTMENT

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Another thing to be careful of...


if I have understood the nice man at the tax office correctly (always a big 'if'...)
Could you ask him to give you some written material on this so that there are no misunerstandings as there are so many different tax rules here? Maybe he could give a link for the text of actual law?
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Old 05.04.2011, 20:01
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Re: No capital gains tax on real estate - REINVESTMENT

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What does that exactly mean and what are the benefits if there is no tax exemption?

Are there any capital gains tax exemptions in Switzerland at all?
The tax will need to be paid eventually if you sell the final property to downsize on for example retirement.

Moveable property such as stocks & shares are exempt from CGT in CH
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Old 05.04.2011, 22:20
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Re: No capital gains tax on real estate - REINVESTMENT

Although technically correct that the CGT is deferred, I would expect that the eventual CGT liability would be reduced due to the time effect on the CGT calculation. CGT is loaded heavily in the first few years, then gradually reduces after 5 years until after 20 years it is discounted 50%.

http://www.stadt-zuerich.ch/content/...ug_stg_225.pdf

Assuming that the gain on the first property is really rolled over onto the second, it would expect the clock then starts from that time ie an immediate x,000 sfr gain on the new property, with the clock now counting from day 1. So after 5 years in the second property the CGT liability would start to reduce. It may not work quite like this, as it would mean selling the new property within 5 years could leave you to an excessive CGT liability, due to the clock being reset when making the second purchase.

Alternatively, rather than roll over the gain, they might roll over the CGT liability as at the time of second purchase, or a time adjusted gain. I really don't know, but I would want to know the detail if I was doing this.
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Old 05.04.2011, 22:24
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Re: No capital gains tax on real estate - REINVESTMENT

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Another thing to be careful of...

We are looking to purchase another home and sell our current one. However, it is likely that we will need to do extensive renovation work on any house we find, as the only properties we've seen have all been in a practically unliveable state. This means that we would need to buy house number 2 first, renovate it, then sell house number 1 - and given the vagaries of the gods of building permission and the snail-like pace of the building industry, the time between the purchase of house 2 and the sale of house 1 could be a year or longer.

So - if I have understood the nice man at the tax office correctly (always a big 'if'...) we cannot roll over any capital gains on the sale of house 1 because house 2 would be classed as a second residence, not a new primary residence. We would therefore be liable for the full whack on capital gains tax. (Which in SZ is 30%, plus the additional penalty or minus the rebate, depending on how long one has owned the house.)

Ouch.
I'm pretty sure I read previously that the rollover has to happen within a certain time period, which I somehow remember to be 1 year (could be wrong there). So, yes there is a risk with the timing, but I think the system allows some leeway - you need to find the details though.

[addition] this is to allow time between the sale of house 1 and eventual purchase of house 2. I guess it is possible that there is a rule to stop you doing this if you already own house 2
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Old 05.04.2011, 23:24
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Re: No capital gains tax on real estate - REINVESTMENT

This is the link to capital gains tax on real estate for GENEVA:


http://ge.ch/impots/impot-sur-les-be...-immobiliers-0
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Old 06.04.2011, 00:45
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Re: No capital gains tax on real estate - REINVESTMENT

A friend of mine did the "reinvestment" and I believe the time frame is within 3 years. If you are nice to your tax people, they may even extend the time...I think he negotiated 5 years since it is so hard to get back into the market with the current high prices....
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Old 06.04.2011, 10:12
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Re: No capital gains tax on real estate - REINVESTMENT

As it seems it is a holiday apartment, is he/sheresident here?

From what I understand, if a primary residence, ie. you live there in it, certain tax advantages are applicable. However, if a secondary residence, rented, or investment property, I understand different tax rules may apply. This may be some of the confusion.
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Old 06.04.2011, 15:20
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Re: No capital gains tax on real estate - REINVESTMENT

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The tax will need to be paid eventually if you sell the final property.
Capital gains tax on real estate decreases each year so the longer one keeps a property the lower the capital gains tax. How would this be calculated in this example when capital gain is being rolled over? What if someone buys property A, sells it after 3 years and immediatelly buys another property B and after one year, sells property B with no capital gain, is there any capital gains tax to pay because there was a roll over from the first property?

Do you have a copy of the actual text of the law regarding rolling over capital gains tax or know where I can get a copy? Thanks
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Old 08.04.2011, 17:54
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Re: No capital gains tax on real estate - REINVESTMENT

If one lives in a different canton in my case Zurich but owns a holiday property in Valais where is the capital gains tax due to be paid, i assume rates differ from canton to canton for this?

I have also heard that I can offset improvements and fees ( including estate agent fees) against this exeptionally high CGT is that true? Anybody know?

Also anybody know a good English speaking accountant on the French side that would be happy to help me with these 'offsets'?

Just one more question the estate agents are giving me commision rates to see of 4 or 5%. I am finding this outrageous especially since it appears they just want to sit on their arses and do sweet .... for that very tidy huge sum ! What is the normal rate on the French side or any side for that matter? I am going round and round in circles at the moment trying to get the CORRECT info.

thanks
Cosmicgirl

Last edited by Cosmicgirl; 08.04.2011 at 18:21.
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