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Old 29.01.2008, 11:49
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Property Tax

Can anybody point me in the right direction to find out who property tax is calculated? In SA it is called rates & taxes, paid by the owners of properties, and calculated as a fixed percentage of the value put on your property by the council. Is it the same in Switzerland?
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Old 29.01.2008, 12:43
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Re: Property Tax

you pay only income tax here.
the only time you can pay tax on a property is [loosely] when you sell and make a profit
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Old 29.01.2008, 12:47
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Re: Property Tax

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you pay only income tax here.
the only time you can pay tax on a property is [loosely] when you sell and make a profit
Doesn't one also pay a tax on all the assets one has here in Switzerland? While not strictly a property tax, I'm pretty sure property gets taxed as part of that.
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Old 29.01.2008, 12:49
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Re: Property Tax

wealth tax can surely only be charged upon things you own? The asset that is a house is usually offset by the mortgages upon it. I am actually certain that my tax return does not have my house value on it.
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Old 29.01.2008, 12:59
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Re: Property Tax

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wealth tax can surely only be charged upon things you own? The asset that is a house is usually offset by the mortgages upon it. I am actually certain that my tax return does not have my house value on it.
I think that's probably one of the major reasons people tend not to pay off their mortgages here in Switzerland.
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Old 29.01.2008, 13:08
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Re: Property Tax

I declared the value of my UK property and the size of the mortgage. I think then a percentage was charged on my share of the house - 2.5% I think, but I may be mistaken.
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Old 29.01.2008, 13:08
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Re: Property Tax

You pay Eigenmietwert, the theoretical rental value of your property, which is, in essence, a kind of property tax. Eigenmietwert was introduced as a way of leveling the playing field between owners and renters, as I understand it.

The formula for calculating Eigenmietwert is somehow derived from a percentage of the market value of your property, but I've never been able to work out how they arrived at the figure at the bottom of our statement. You should have a chat with the tax folks at your Gemeinde.

(Interestingly enough, KT SZ is in the process of adjusting base home values from which they calculate Eigenmietwert - so they are sending inspectors to visit every house in the canton for a valuation. The gentleman who visited us was most concerned with measuring the living space, noting upgrades to the property, etc. I haven't been given a copy of the new valuation yet - will be very enlightening to see what they come up with.)

The Eigenmietwert amount is added to your income, and you then pay income tax on the whole shebang. So how much "property tax" you will pay is also dependent on which tax bracket you fall into. As LR says, though, you are also able to deduct the interest on your mortgage, which in many - but not all - cases offsets the Eigenmietwert. For instance, if you have a low mortgage on an property with a high market value, you may find that you pay more in Eigenmietwert than you can deduct.

A discussion with a tax planner may be in order before deciding what kind of mortgage best suits your needs.

As always in der Schweiz, there will be cantonal and Gemeinde variations. YMMV.

Last edited by meloncollie; 29.01.2008 at 13:15. Reason: italics, spelling
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Old 29.01.2008, 13:59
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Re: Property Tax

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You pay Eigenmietwert, the theoretical rental value of your property, which is, in essence, a kind of property tax. Eigenmietwert was introduced as a way of leveling the playing field between owners and renters, as I understand it.

The formula for calculating Eigenmietwert is somehow derived from a percentage of the market value of your property, but I've never been able to work out how they arrived at the figure at the bottom of our statement. You should have a chat with the tax folks at your Gemeinde.

(Interestingly enough, KT SZ is in the process of adjusting base home values from which they calculate Eigenmietwert - so they are sending inspectors to visit every house in the canton for a valuation. The gentleman who visited us was most concerned with measuring the living space, noting upgrades to the property, etc. I haven't been given a copy of the new valuation yet - will be very enlightening to see what they come up with.)

The Eigenmietwert amount is added to your income, and you then pay income tax on the whole shebang. So how much "property tax" you will pay is also dependent on which tax bracket you fall into. As LR says, though, you are also able to deduct the interest on your mortgage, which in many - but not all - cases offsets the Eigenmietwert. For instance, if you have a low mortgage on an property with a high market value, you may find that you pay more in Eigenmietwert than you can deduct.

A discussion with a tax planner may be in order before deciding what kind of mortgage best suits your needs.

As always in der Schweiz, there will be cantonal and Gemeinde variations. YMMV.
Bobby... I guess it depends if you want to know i) which part of your taxes pay for local services eg schools roads etc vs ii) which taxes are levied by reference to property real or notional values. In Switzerland it is very much the cantonal and local taxes that do that since it pays for schools, local roads and infrastructure, whereas the federal tax pays for the army and big infrastructure of national interest like (some) motorways etc.

There is a complicated actual calculation method, but generally the taxable value and rental value work out at 60-70% of the real market value. Note this is relevant to people declaring overseas property too, so you could legitimately take a haircut to the market value of that. BTW I have never been asked to evidence the value of either our overseas properties.

You can be certain that both values will go up, it's canton schwyz's SZ way of raising taxes without raising the tax rate.

Daniel
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Old 29.01.2008, 14:09
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Re: Property Tax

My SZ tax has gone down this year, Daniel. Certainly Gemeide tax is predicted to be lower as there are more people to pay what is required

Let's face it - tax in Switzerland isn't bad and certainly more transparent and scalable when compared to places like the UK
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Old 29.01.2008, 14:19
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Re: Property Tax

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My SZ tax has gone down this year, Daniel. Certainly Gemeide tax is predicted to be lower as there are more people to pay what is required

Let's face it - tax in Switzerland isn't bad and certainly more transparent and scalable when compared to places like the UK
Well I guess that is a bit of a blanket statement. If you are living in Shorricks republic of Geneve I guess you will not be saying that taxes are lower than in the UK because they are not(woooooo Overall taxation is higher in Geneve when you include all the taxes you get hit for ie social taxes and health insurance).

But of course if you are living in Altendorf...
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Old 29.01.2008, 14:48
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Re: Property Tax

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My SZ tax has gone down this year, Daniel. Certainly Gemeide tax is predicted to be lower as there are more people to pay what is required
Sure, its the canton SZ pushing for more declared income, meanwhile Wollerau and Altendorf communes reduced their rates, so net net you might be better off, but its the mix that is shifting towards the canton.

My advisor told me all sorts of stuff that they used to accept is being challenged, and much more demand for backup (for example I never submitted any proof of assets before, but this time was asked).

Since death is unavoidable, Im focussing on getting rid of taxes!

Daniel
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Old 29.01.2008, 14:57
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Re: Property Tax

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Since death is unavoidable, Im focussing on getting rid of taxes!

Daniel
In which case I think you might find Monaco your best bet...
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Old 29.01.2008, 15:13
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Re: Property Tax

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In which case I think you might find Monaco your best bet...
I thought I might just stop earning money and give away what I managed to accumulate so far.

BTW is anyone around here actually doing any work today?

Daniel
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Old 30.01.2008, 09:11
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Re: Property Tax

Thanks for all the helpful info. I was actually just wondering why more people don't own property, since the bond repayments are WAY lower than rentals. As Gooner said some time ago, only the Anglo Saxons are obsessed with owning property, and I am one of those (I think it gives me a (maybe false) sense of security). So for planning and budgeting purposes, is there a % one can attach to the purchasing price which needs to be set aside? Can anybody who already owns property perhaps do this calculation on their own property & let me know?
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Old 30.01.2008, 11:06
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Re: Property Tax

Bobby, from the KT SZ website, here is a sample assessment of Eigenmietwert on a typical house with an assessed value of 755, 801.

http://www.sz.ch/steuern/Schaetzunge...haetzung07.pdf

Note, however, that this may not be the market value, rather the assessed value. Going on the suggestion that the assessment is typically 70% of market value, the house might be worth 1,080,000. (Only a conjecture, although this percentage seems to be within rough ballpark of our assessment vs the price we paid 4 years ago.)

Anyway you can see that the theoretical rental value is based on living space, number of rooms, average area rental prices, etc. In this example, the rental value for this house, in this area, is assigned at 37,104 - the Eigenmietwert is 65% of that, or 24,118.

This 24,118 is then added to your income, the idea being that you have 'saved' this amount by owning, not renting. So your 'property tax' is in essence the income tax on this additional amount. How much extra you will actually pay in income tax is dependent on your tax bracket.

BUT... if you are carrying a mortgage of say, 2.0 - 2.5% you will likely have paid more than that in mortgage interest, which can be deducted, effectively canceling out the Eigenmietwert. If you don't have much in the way of mortgage interest payments, though, you may find that the deduction isn't enough to offset Eigenmietwert. Which is why you need to do some tax planning when buying a property.

Also, you will pay wealth tax on the assessed value of the property - this is only a fraction of a percent however.

This is an example from SZ - other cantons may use different assessment figures. The best thing to do is to speak with the tax office in the town where you are interested in purchasing. The previous years' assessments on a property should be public record, I believe.

If you scour around the various cantonal websites you might find similar examples to learn how each canton assesses property.

And to add to the confusion, there are currently proposals floating about to abolish the Eigenmietwert practice - and with it the mortgage interest deduction.

So everything may change. Or not.


ETA: To the question of why don't more people buy:

One reason that many people rent rather than buy is that usually a 20-30% down payment is required to obtain a mortgage. With typical property prices well over the million mark, that's a rather large chunk o' cash to have squirreled away. As property price have barely risen in the last decade in many areas, other investments are often seen as a more productive use of that money.

Last edited by meloncollie; 30.01.2008 at 11:42.
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Old 17.02.2008, 22:42
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Re: Property Tax

Wealth tax: Estimated value of property, minus the mortgage, is effectively wealth. It is added to other assets (bank accounts, investments, shares, car, etc,) to determine wealth. Wealth is taxed when it exceeds a threshold (different in each Canton!) but about 50k threshold for single persons, higher for married persons.

Income tax: As already described, the deemed rental value is taxable. But is offset against the deductible mortgage payments.
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