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Old 12.12.2020, 15:04
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Grundstückgewinnsteuer does it apply to flats and houses

If I understand correctly Grundstückgewinnsteuer is applied from the income when selling piece of land (difference purchase price and selling price). But does it also apply to houses and flats?
Imagine I purchase a house for 700k CHF, renovate it for 250k CHF and sell it for 1000k CHF. Do I need to then pay Grundstückgewinnsteuer from 300k CHF? I see in Kanton Zurich it is 40% with reduction by 3% every year. So after 20 years I would still need to pay ~19% which is 57k CHF. My actual income was only 50k so tax is higher than income.
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Old 12.12.2020, 15:35
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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If I understand correctly Grundstückgewinnsteuer is applied from the income when selling piece of land (difference purchase price and selling price). But does it also apply to houses and flats?
Imagine I purchase a house for 700k CHF, renovate it for 250k CHF and sell it for 1000k CHF. Do I need to then pay Grundstückgewinnsteuer from 300k CHF? I see in Kanton Zurich it is 40% with reduction by 3% every year. So after 20 years I would still need to pay ~19% which is 57k CHF. My actual income was only 50k so tax is higher than income.
You would get either income tax it CGT tax deductions of 300k depending on exactly what you did, so small tax liability. Buying & selling costs are high so you might make a loss with those no’s
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Old 12.12.2020, 15:37
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Re: Grundstückgewinnsteuer does it apply to flats and houses

Gründstückgewinnsteuer is levied on all real estate sales profit. This includes not only the land but also the house and or apartments. In short: anything in the land registry, including mines.

The Gründstückgewinnsteuer is a profit tax. No profit means also no tax. In your case the profit would be roughly 50k. May be even less, see fatmanfilms above.

For details see the Canton Zurich Tax Act starting at §205. For deductions see § 221
http://www2.zhlex.zh.ch/appl/zhlex_r.nsf/WebView/49B30E8052B9D928C125849A00480C6C/$File/631.1_8.6.97_107.pdf

Last edited by aSwissInTheUS; 12.12.2020 at 16:10.
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Old 12.12.2020, 17:29
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Re: Grundstückgewinnsteuer does it apply to flats and houses

Whatever you did to it, keep every receipt, they're worth their weight in gold!
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Old 12.12.2020, 19:57
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Re: Grundstückgewinnsteuer does it apply to flats and houses

You can avoid the tax altogether by on sale, buying another property for the sale price or higher within Switzerland...
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Old 13.12.2020, 11:35
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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You can avoid the tax altogether by on sale, buying another property for the sale price or higher within Switzerland...
Not quite 'avoid', just postpone. The profits on any transactions are accumulated such that when you (or your estate) eventually sell up or downscale the CGT is payable on the total increase in value.

Oh, and this is only the case for your primary residence, which doesn't sound like what the OP has in mind.
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Old 13.12.2020, 11:54
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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Not quite 'avoid', just postpone.
Not just 'postpone', but also 'reduce', as the taxes are less the longer you wait.

Tom
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Old 13.12.2020, 12:23
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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Not just 'postpone', but also 'reduce', as the taxes are less the longer you wait.
Ah, that I didn't know. How does it work exactly?

We're only on our second Swiss property, but made a reasonable 'profit' after ten years in the first one and offset it when we moved to the second, but I didn't really look into the long-term effects of this.
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Old 13.12.2020, 12:51
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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Ah, that I didn't know. How does it work exactly?

We're only on our second Swiss property, but made a reasonable 'profit' after ten years in the first one and offset it when we moved to the second, but I didn't really look into the long-term effects of this.
As far as i know, the clock doesn't reset each time you upgrade, so if you upgrade yearly for 20 years, or keep one for 20 years, you will pay the same reduced rate in both cases.

Tom
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Old 13.12.2020, 13:13
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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As far as i know, the clock doesn't reset each time you upgrade, so if you upgrade yearly for 20 years, or keep one for 20 years, you will pay the same reduced rate in both cases.
But what is this reduced rate of which you speak? How exactly does it work? Is it reduced more the longer the time period?

Details, man, details.
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Old 13.12.2020, 15:50
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Re: Grundstückgewinnsteuer does it apply to flats and houses

Real estate capital gains tax is per-canton, and typically at a higher rate for short term ownership. Presumably, this is to discourage short term real estate speculation.

I found a nice example table published by Credit Swiss, showing the taxes due in different Cantons, all assuming a 250k profit after 5 or 20 years.
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Old 13.12.2020, 16:01
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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Real estate capital gains tax is per-canton, and typically at a higher rate for short term ownership. Presumably, this is to discourage short term real estate speculation.

I found a nice example table published by Credit Swiss, showing the taxes due in different Cantons, all assuming a 250k profit after 5 or 20 years.
Cool, good thing we live in Lugano!

From that link, 65k after 5 years, 12.5 k after 20, on 250k profit in Lugano, some of the northern cantons almost no difference!

Tom
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Old 13.12.2020, 16:14
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Re: Grundstückgewinnsteuer does it apply to flats and houses

If you'd like to calculate the grundstückgewinnsteuer, here's the calculator:

https://brixel.ch/grundstueckgewinns...chner/zuerich/

Last edited by justpassingby; 13.12.2020 at 16:21. Reason: added steuer
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Old 14.12.2020, 18:51
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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Imagine I purchase a house for 700k CHF, renovate it for 250k CHF and sell it for 1000k CHF. Do I need to then pay Grundstückgewinnsteuer from 300k CHF?
In this case the tax % is on the income of CHF50k, but it really depends on what you did with the 250k renovations.

The 2 ways you can spend that 250k:

1. You replaced something old, eg. an old boiler: No added value, but replacing something old to maintain the value of your property. This can be written off from your income tax for that year. So if you spent 20k on a boiler, you will have 20k less taxable income for that year.
2. You added something new eg. a roofed garden terrace (the house didn't have one before). This increases the value, which will be deducted from your Grundstückgewinnsteuer.

How do you decide whether it adds value or maintains value? Kanton Zurich provides a list which determines the various possible renovation stuff, but it is also up to you to declare it. Some items (I can't remember exactly, so this is just an example) can be split, eg. 70% to maintain, and 30% to increase. I suppose if you install underfloor heating to replace the old radiators, you should be able to split it. So you could allocate 70% to your annual income tax because it replaces something that was already there (heating), and 30% to the grundstuckgewinnsteuer because because it is an upgrade.

Of course it is better to push everything towards "increase value" because the gründstuckgewinnsteuer" rate is higher than your income tax. However, you have to be reasonably certain that you are selling, and as I mentioned Kt.Zurich actually provides a list... And remember, once you have already claimed 70% of that heating under your annual income tax, you cannot change your mind later when you sell the house as they will have a record of it!
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Old 14.12.2020, 18:57
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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Not just 'postpone', but also 'reduce', as the taxes are less the longer you wait.

Tom
Not sure about this. I was advised that once your tax amount has been determined, that's that. So, I sold a property 2 years ago, the tax was determined at CHFx, but the payment is postponed because I bought a more expensive house. If in 30 years I finally sell off and move into care home, I still have to pay that CHFx. No additional reductions.
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Old 14.12.2020, 19:04
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Re: Grundstückgewinnsteuer does it apply to flats and houses

I found the Zurich list. Page 12 onwards. Second last column shows what you can write off from your income tax, the last column is what you can write off from the Grundstuckgewinnsteuer:


https://www.zh.ch/content/dam/zhweb/...tB-Nr-30-3.pdf
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Old 28.06.2021, 14:00
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Re: Grundstückgewinnsteuer does it apply to flats and houses

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As far as i know, the clock doesn't reset each time you upgrade, so if you upgrade yearly for 20 years, or keep one for 20 years, you will pay the same reduced rate in both cases.

Tom
This is true. We have discovered this as well. This does not apply to land.

But we are still in dispute over some things which were excluded from our list of improvements. We will appeal.
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