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-   -   Tax implications of owning a holiday property? (https://www.englishforum.ch/finance-banking-taxation/41230-tax-implications-owning-holiday-property.html)

meloncollie 16.01.2009 10:57

Tax implications of owning a holiday property?
 
Neither Google nor the search engine seem to be my friend today, ;) so I'm hoping some of you might know... or be able to point me towards any relevant threads/articles I've missed.

I am considering purchasing land in a canton other than the one in which I reside (and pay taxes), and I'm trying to understand the tax implications of owning a second residence. For what it's worth, I live in SZ, the property is in SG.

Assuming that the property is indeed zoned for use as a holiday home (I need to verify this), how does taxation work? I pay income and wealth taxes in SZ - would my liabilitiy to SG and the SG Gemeinde simply be the tax on the Eigenmietwert of the property? Or would SG also levy tax on income and wealth?

Any insights would be much appreciated.

markalex 16.01.2009 11:37

Re: Tax implications of owning a holiday property?
 
I live in ZG, own and rent a house in VD. Complete a tax return for ZG (principle residence) of which a copy goes to VD where I also pay tax. Since I rent the house in VD which means I get an income from it, which is one of the reasons I pay tax there. I also have to pay some bills which relate to owning a property in VD such as water tax.

meloncollie 18.01.2009 00:38

Re: Tax implications of owning a holiday property?
 
Thanks, Markalex!

I found this - may I ask if this meshes with your experience?

http://www.estv.admin.ch/d/dokumenta...ossier/e1a.pdf

"Gleiches gilt für eine schweizerische steuerpflichtige Person, welche im Kanton A Wohnsitz hat und eine Liegenschaft (z.B. Wohnung oder Ferienhaus) im Kanton B besitzt. Sie muss in letzterem Kanton die kantonalen und kommunalen Steuern auf dem aus der Liegenschaft fliessenden Einkommen (Eigenmietwert oder Mietzins) bezahlen sowie die Kantons- und Gemeindesteuern auf dem dieser Liegenschaft entsprechenden Vermögensteil.

Die Steuer wird aber – und das ist besonders wichtig – zu dem für das gesamte Einkommen und Vermögen gültigen Steuersatz berechnet. "

So, if I understand this correctly...

I would pay income tax to the canton and Gemeinde of my primary residence (SZ), plus I would pay taxes on the Eigenmietwert of the holiday home, any rental income generated by that property, and wealth tax on that property, to the canton and Gemeinde in which the holiday home is located (SG). I would pay the SG liabilities at the rate of my combined income, however.

But, I would not be liable for taxes on 'regular' income in SG - only in SZ, my primary residence - does that sound correct?

Frosty 18.01.2009 01:14

Re: Tax implications of owning a holiday property?
 
I think you'll pay the Eigenmietwerk but not more tax on the actual rental income as well. Others may correct me but I think I'm right.

dannyt986 18.01.2009 12:16

Re: Tax implications of owning a holiday property?
 
Quote:

Originally Posted by meloncollie (Post 383403)
But, I would not be liable for taxes on 'regular' income in SG - only in SZ, my primary residence - does that sound correct?

Yes that is correct, you just pay tax in SG on the notional and real income and wealth related to the property... the rest will stay safely taxed in SZ. The home canton does a "steuerauschied" or "repartition intercantonale" based on your tax return and communicates the relevant portion to SG. Same goes for overseas property.

Daniel

Monika 31.08.2009 11:45

Re: Tax implications of owning a holiday property?
 
We are thinking of buying a small Holiday property in Switzerland (Luzern, Schwyz) and like Melancollie I can not find anything on surfing the Internet or via the link of the estv. Not even the Organisation of the Swiss Abroad could help me. Now the Members of this Forum are my only hope.
What would the Tax implications be for a Swiss living and paying tax in GB. I know that every Kanton is different, but just approx. Our dream might be shortlived.

firam 20.10.2009 19:46

Re: Tax implications of owning a holiday property?
 
Could someone please explain?
In the following situation:
I have a holiday home in switzerland. I do not work there or live there. I live in UK. What taxes do I need to pay there?

Do I need to pay taxes if I dont rent it out?

Can I deduct my mortgage from tax?

This is urgent.
Thank you!

smackerjack 20.10.2009 19:57

Re: Tax implications of owning a holiday property?
 
Quote:

Originally Posted by firam (Post 583047)
Could someone please explain?
In the following situation:
I have a holiday home in switzerland. I do not work there or live there. I live in UK. What taxes do I need to pay there?

Do I need to pay taxes if I dont rent it out?

Can I deduct my mortgage from tax?

This is urgent.
Thank you!



You have to pay tax on your home on what you could get if you rented it out.
Also you must pay tourist tax - it is not that high

markalex 20.10.2009 20:05

Re: Tax implications of owning a holiday property?
 
Even if you dont rent a property and therefore get no income you will still find yourself paying bills such as watertax and TV licenses, whereever you live in the world.

firam 21.10.2009 00:00

Re: Tax implications of owning a holiday property?
 
thank you very much.

so even if I dont rent it out there are still taxes?

Do you know how much they are?

Thanks!

markalex 21.10.2009 08:13

Re: Tax implications of owning a holiday property?
 
firam,

If you have the finance available to purchase a holiday property then the taxes you will subsequently pay on it will be inconsequential. The biggest bill will most likely bill the building & contents insurance.

The big banks here count on 1% maintenance costs, so if your property is 1m, it would be prudent to budget 10,000 to cover all. You would almost certainly need less, but better to be sure.

Monika 21.10.2009 09:49

Re: Tax implications of owning a holiday property?
 
One of my (Swiss) friends told me that there are no taxes to pay on a holiday property and that it is a very simple process to buy property in Switzerland, another (Swiss) friend told me that they pay 400 Sfr a month in Taxes (for two properties) and they work and pay taxes abroad.
Basically the advice I received was, go to the "Gemeinde" and ask, each canton is different.

amogles 21.10.2009 10:22

Re: Tax implications of owning a holiday property?
 
I'm thinking of doing the reverse. I live in ZH where I also rent my appartment. However, I am looking into buying a house in Germany which would be a de-facto holiday home with no rent income, but obviously I would still be paying various taxes there for water, public services etc. How would I evaluate the Eigenmietwert or taxable value of the property etc for my Swiss tax declaration. The purchase price I'm paying isn't the market value because there are various strings and conditions attached, but I don't know how to put that on a tax form.

Syt 21.10.2009 11:41

Re: Tax implications of owning a holiday property?
 
In any OECD country, it's the same: income and wealth that relate to a real estate are taxable in the country where the real estate is located (objective allocation).

Therefore in CH, net rental income (or virtual rental income = valeur locative = Eigenmietwert) less expenses related to mortgage and net asset value of the property (tax value less mortgage) are taxable in CH, respectively in the commune (Gemeinde) where the real estate is located. If your permanent tax residence is in CH, your home canton will prepare the intercantonal tax allocation between the canton of location of the real estate and your home canton. The allocation of mortgage and debt is proportional (not objective). Whereas in international matters, it is usually an objective allocation and you have to:
- appoint a tax representative in CH
- file each year a tax return
- pay the taxes that relate to the real estate
The applicable tax rate is at least the one corresponding to the real estate income and value, which means that the canton can tax at the corresponding worldwide rate. In some canton, (Vaud is one of them), you have a simplified taxation if you own only a real estate in CH, which is based on an estimation of the usual mortgage and worldwide income/wealth. This way, you avoid disclosing everything you have worldwide...

Goldtop 21.10.2009 19:59

Re: Tax implications of owning a holiday property?
 
Quote:

Originally Posted by Syt (Post 583581)
In any OECD country, it's the same: income and wealth that relate to a real estate are taxable in the country where the real estate is located (objective allocation).

Therefore in CH, net rental income (or virtual rental income = valeur locative = Eigenmietwert) less expenses related to mortgage and net asset value of the property (tax value less mortgage) are taxable in CH, respectively in the commune (Gemeinde) where the real estate is located. If your permanent tax residence is in CH, your home canton will prepare the intercantonal tax allocation between the canton of location of the real estate and your home canton. The allocation of mortgage and debt is proportional (not objective). Whereas in international matters, it is usually an objective allocation and you have to:
- appoint a tax representative in CH
- file each year a tax return
- pay the taxes that relate to the real estate
The applicable tax rate is at least the one corresponding to the real estate income and value, which means that the canton can tax at the corresponding worldwide rate. In some canton, (Vaud is one of them), you have a simplified taxation if you own only a real estate in CH, which is based on an estimation of the usual mortgage and worldwide income/wealth. This way, you avoid disclosing everything you have worldwide...

Are you saying that in VD the wealth tax rate on VD assets is independent of total global assets?

smackerjack 21.10.2009 20:25

Re: Tax implications of owning a holiday property?
 
Quote:

Originally Posted by Goldtop (Post 584197)
Are you saying that in VD the wealth tax rate on VD assets is independent of total global assets?


Goldtop, I think that if you are not a permit holder you are given a choice. I spoke to the Office d'impot and was told about a simplified procedure. If you do not want to do it this way you can be taxed according to the normal procedure.
In their opinion if you just hold a holiday home it is cheaper to pay tax by the simplified procedure

Syt 22.10.2009 11:48

Re: Tax implications of owning a holiday property?
 
Quote:

Originally Posted by smackerjack (Post 584221)
Goldtop, I think that if you are not a permit holder you are given a choice. I spoke to the Office d'impot and was told about a simplified procedure. If you do not want to do it this way you can be taxed according to the normal procedure.
In their opinion if you just hold a holiday home it is cheaper to pay tax by the simplified procedure

Correct. This is an estimation. If I remember well, it's a multiplier of the value of the real estate.

proski 17.06.2012 00:53

Re: Tax implications of owning a holiday property?
 
Hi all... hope someone can help me... I live in the UK and have a small second home in CH with a large swiss mortgage (with nice and low interest rates). Each year I have received a swiss tax declaration which I filled out honestly and because of my large mortgage and modest income the payable tax was very low. Suddenly this year the swiss tax man has decided I can only use 10% of my mortgage as a deduction. This makes a significant difference to the tax bill! Are they entitled (legally) to do that?! Surely that means I have to pay tax on something that is not in fact mine?! What should/can I do?:confused:

Thanks in advance.

Rangatiranui 17.06.2012 07:19

Re: Tax implications of owning a holiday property?
 
Hi Proski.

There was an initiative launched this year changing the laws about "second homes".
Here is a website:
http://www.zweitwohnungsinitiative.ch/

It may also have had tax implications.

Nixi 17.06.2012 09:51

Re: Tax implications of owning a holiday property?
 
My advice to anyone not living in Switzerland and getting a Swiss property is to get a local tax accountant to do your tax return. They will help you fill out the forms etc and know the right people to talk to if you need to query anything. It's not vastly expensive and you will have someone on the spot who knows the local ins and outs. Once you have done that for a couple of years and got the basics sorted, you could probably do your own tax return if you like doing that kind of thing.


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