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  #21  
Old 13.10.2020, 20:33
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Re: Declaring Uk home for tax benefits

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Farman you are amazing knowledge thank you

If we can go back to the question can someone help me understand the tax saving so I can see if itís worth it

Income after deductions pillar 2 contributions pillar 3 etc is 100k. Before those deductions gross salary is 150k

House worth 1.2 million gbp
Mortgage debt 750k gbp
Rental value 3.5k gbp a month
Insurance and maintenance 5k gbp
You have to declare assets by law, I would use a lower value say 1 million so 250k net. If you buy a house in CH, the Mortgage will usually exceed the tax value which is often 50-70% of price paid.

My first property in London in 1983 cost about 8 years rent, last sold for £850,000. I can't imagine any 21 year olds being able to pull that off today, it was £40k at the time when average UK house prices were about half that.

Notional rental income is irrelevant

Without rental income you can't deduct the running costs, however mortgage interest is deductible in full regardless
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  #22  
Old 13.10.2020, 21:31
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Re: Declaring Uk home for tax benefits

I am going to call the tax office and get this confirmed.

It’s very interesting if this is indeed the case. I’ll post back my findings

What is Zurich wealth tax on 500k chf asset?

The tax saving is 15k chf removed from my income to cover just the interest component. I guess that amounts to just 3k tax saving assuming a 20% tax rate
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  #23  
Old 13.10.2020, 21:45
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Re: Declaring Uk home for tax benefits

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I am going to call the tax office and get this confirmed.

Itís very interesting if this is indeed the case. Iíll post back my findings

What is Zurich wealth tax on 500k chf asset?

The tax saving is 15k chf removed from my income to cover just the interest component. I guess that amounts to just 3k tax saving assuming a 20% tax rate
528 CHF however I always deducted 0.3% for management costs against my income for capital assets, no idea if it will work with property but worth a try
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  #24  
Old 13.10.2020, 22:34
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Re: Declaring Uk home for tax benefits

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528 CHF however I always deducted 0.3% for management costs against my income for capital assets, no idea if it will work with property but worth a try
Im sorry i did not understand this answer. Can you say it again
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  #25  
Old 13.10.2020, 23:00
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Re: Declaring Uk home for tax benefits

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Im sorry i did not understand this answer. Can you say it again
For stock market investments I would deduct 1500 chf against income tax as an amount to manage 500k of investments, even if I was administering the investments myself. Actual costs can be used if higher.

The saving in income tax will pay the wealth tax, this gives people an incentive to declare assets.
Historically wealthy people used numbered investment accounts, the statement were written to custody account 123456da rather than a name. Prevents wife, children, Tax authorities & anyone else knowing your business. Secrecy above all else in CH
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  #26  
Old 14.10.2020, 03:26
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Re: Declaring Uk home for tax benefits

Not everything is necessarily written in quite the right way.



Maybe the rule is different in Zurich but in Basel Stadt you don't get taxed *directly* on the imputed rental value of a property in the UK, but it does increase the the overall tax rate so UK property is taxed *indirectly*.

So while it's true to say UK property is not taxable, there is an additional income tax burden of owning a property in the UK even though no direct income tax is applied to it. For the amounts I pay it seems it may as well be directly taxed. *In effect* UK property is taxed in Switzerland.



Do you get taxed on UK imputed rental income? - No.

Does it increase your tax liability? - Yes.


Now, I did once see some Swiss tax advice that said if you live in your family home (in Switzerland) and your kids leave to lead their own lives you can declare less in eigenmietwert because the kids rooms are not being used any more. Quite how you put that in the forms I don't know.
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  #27  
Old 14.10.2020, 12:18
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Re: Declaring Uk home for tax benefits

Thnaks Landers - Can you share some numbers anonymously please...

Like value of house value of mortgage and tax increase and where tax increase is applied - Do you mean it is wealth tax or something else?

Fatman seemed to think that deductions can be made and mortgage interest payments deducted with no imputed rents - That would lead to a reduction in tax if true

I am scared to call the tax office
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  #28  
Old 14.10.2020, 13:11
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Re: Declaring Uk home for tax benefits

Zurich tax office confirmed that imputed rent is definitely included for non Swiss properties

So if you have a house with a 50% mortgage and no outrageous leasehold costs you will pay dearly for keeping Uk property empty

Wealth tax is peanuts but imputed rent is 50k chf. Mortgage payments of 15k and maintenance of 5k means I have an additional 30k of
Income theoretically.
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  #29  
Old 14.10.2020, 13:27
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Re: Declaring Uk home for tax benefits

I can only quote what my tax advisor and the tax office (TI) has told me. That is UK (foreign) property) which I own, is not taken into account by the Swiss authorities, as Real Estate is sovereign. You cannot deduct foreign interest from your Swiss taxes, nor can you deduct any maintenance / renovation costs.


All of this falls to (in your case) HMRC. If you are non-resident in the UK, you own the property and it's not rented out, then you can deduct nothing.


If you rent the property, then the UK rent is taxed either at source or deferred if you have HMRC's permission. In the tax return you can then deduct renovation costs, letting fees and interest. But, HMRC will want to know how much you earn elsewhere in order to set the rate of tax which will be calculated after any allowances. So if your Swiss + rental income is more than GBP 50,000 after allowances, you will be taxed on the net rental income at 40% rather than 20%.


The only thing the Swiss will take into account, for the purposes of wealth tax, is the value of the property.
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  #30  
Old 14.10.2020, 15:24
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Re: Declaring Uk home for tax benefits

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I can only quote what my tax advisor and the tax office (TI) has told me. That is UK (foreign) property) which I own, is not taken into account by the Swiss authorities, as Real Estate is sovereign. You cannot deduct foreign interest from your Swiss taxes, nor can you deduct any maintenance / renovation costs.


All of this falls to (in your case) HMRC. If you are non-resident in the UK, you own the property and it's not rented out, then you can deduct nothing.


If you rent the property, then the UK rent is taxed either at source or deferred if you have HMRC's permission. In the tax return you can then deduct renovation costs, letting fees and interest. But, HMRC will want to know how much you earn elsewhere in order to set the rate of tax which will be calculated after any allowances. So if your Swiss + rental income is more than GBP 50,000 after allowances, you will be taxed on the net rental income at 40% rather than 20%.


The only thing the Swiss will take into account, for the purposes of wealth tax, is the value of the property.
Regarding your point on HMRC wanting to know your global income this is nonsence - You benefit from a personal tax free allowance which many on this forum have talked about. If you earn 50K in rental income you pay basic rate uk tax - Nothing to do with other income - You are non resident in the uk....

Secondly zurich tax office told me they have many cases of second empty homes in italy which does need to be declared and imputed rents are needed and deductions and interest are payable
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  #31  
Old 14.10.2020, 15:40
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Re: Declaring Uk home for tax benefits

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I can only quote what my tax advisor and the tax office (TI) has told me. That is UK (foreign) property) which I own, is not taken into account by the Swiss authorities, as Real Estate is sovereign. You cannot deduct foreign interest from your Swiss taxes, nor can you deduct any maintenance / renovation costs.


All of this falls to (in your case) HMRC. If you are non-resident in the UK, you own the property and it's not rented out, then you can deduct nothing.


If you rent the property, then the UK rent is taxed either at source or deferred if you have HMRC's permission. In the tax return you can then deduct renovation costs, letting fees and interest. But, HMRC will want to know how much you earn elsewhere in order to set the rate of tax which will be calculated after any allowances. So if your Swiss + rental income is more than GBP 50,000 after allowances, you will be taxed on the net rental income at 40% rather than 20%.


The only thing the Swiss will take into account, for the purposes of wealth tax, is the value of the property.

TI must be different then. Like I said before, it's true that imputed (or real) rental income is not taxed directly in Switzerland *BUT* it effectively shifts you higher up the income tax band.


Completely made up and but if your taxable salary is 200k per year and you have 20k of imputed/real rental income that increases your overall tax rate by 2 percentage points, you'll pay an additional 4k in tax on your salary. The 20k will not be taxed in Switzerland (but rather in the UK)



What you write about UK taxation is wrong. If you're non-tax resident the UK tax rate is calculated excluding any foreign income. Only if you're UK tax resident would foreign income be taken into account. Also things that can be deducted from UK rental income has changed recently.

Last edited by Landers; 14.10.2020 at 17:49.
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  #32  
Old 14.10.2020, 18:42
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Re: Declaring Uk home for tax benefits

I can only quote from personal experience. Maybe the rules in TI are different but I was clearly told that UK real estate is not a matter for Swiss taxation, only the value for wealth tax. No amount of tax was applied to me by the Swiss. I've now (recently) sold all my UK property but on the income I received I was asked by the UK tax office to declare my other income in order to establish the rate at which I would be taxed after deduction of all allowances etc.


The non-UK income was not taxed, it merely established the rate of tax I had to pay to HMRC on the UK rental income.


The Swiss (at least in Ticino) apply the same rules, however Double Taxation Treaties kick in and various relief and deductions can be made. I leave it to my tax advisor to work out in agreement with the tax authorities here, and just pay what I'm told to - or rather, what has been agreed!

Last edited by LuganoPirate; 14.10.2020 at 18:57.
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