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Old 13.12.2017, 05:56
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Taxation on house abroad that is rented out

Hi,
If we return to Switzerland, and keep/rent out our house abroad, will we have to pay Swiss taxes or Eigenmietwert on it?
I am Swiss/US dual citizen, my husband just US citizen.
Thank you for any insight!
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Old 13.12.2017, 07:14
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Re: Taxation on house abroad that is rented out

Asset tax on its value, yes.
Income tax on the rental income, yes.
Eigenmietwert no, as that is payable when you own the home in which you live. (So if you bought an apartment in Switzerland and lived in that instead of renting you would pay Eigenmietwert on that one.)
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Old 13.12.2017, 10:04
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Re: Taxation on house abroad that is rented out

There are two methods to tax foreign real properties by the cantons, according to BDO:

Method 1: The foreign real estate is taxed at the tax rate that corresponds to the income earned in the respective canton or country (also notional rental value) and the assets. The tax is calculated without taking into account the taxpayer's other income or assets.

Method 2: Most of the cantons, however, consider foreign properties only as a determining factor (so-called progression reservation). The means that the property and its rental income or notional rental value are not taxed in Switzerland. The corresponding tax factors are used for tax rate determination.

See this brochure and particularly the example for Method 2:

https://www.bdo.ch/getmedia/6f305e3e...sland.pdf.aspx

As you are Swiss, your and your spouse's incomes should normally be subject to regular taxation, rather than source tax (Quellensteuer). So, your canton of residence will be the determining factor whether method 1 or 2 is used.

You might also wish to search the internet for more information.
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Old 13.12.2017, 11:08
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Re: Taxation on house abroad that is rented out

Simply put, you will pay income tax on the property in the country that you are renting it in. Presumably the rental income goes into a bank account held in that country.

Here you need to declare the value of the property (minus 30% at the time of purchase?) as an asset for your wealth tax. You will also need to declare the money that sits in the bank account as wealth.
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Old 13.12.2017, 12:04
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Re: Taxation on house abroad that is rented out

Sorry for my partially inaccurate answer earlier. I don't know enough about double taxation agreements etc. to be able to comment on income tax so I probably should have said nothing (although certainly the foreign income would need to be _declared_ and you would end up paying asset tax on whatever was left of it at the end of the year). However, you can pay more income tax as a result of having a property abroad, which is what happened to us.

Having read "diagonally" that interesting brochure, it seems that the Method 2 is what was applied to us when I inherited a share in an empty house in GB. The tax office (Kt.Schwyz) did a Repartition in which essentially our mortgage debt and interest here in Switzerland was partially allocated to that house in GB and was not able to be offset against our Eigenmietwert here.

The upshot was:
asset tax payable on my share of the house (only a small amount in our case, 0,6 permille on a small property)
Swiss taxable income increased due to lower deductions, therefore higher tax (and possibly higher tax _rate_, depending on the luck of the numbers) payable on income here in Switzerland.

Last edited by medu54; 13.12.2017 at 12:42. Reason: 0,6 permille, oops
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