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Old 13.09.2009, 15:39
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Paying tax on property owned in UK?

I wonder can anyone help me.

I have a property in the uk, which i want to keep as I don't think I will stay in switzerland forever. I currently pay tax in the UK on the rental income.

When i declare the property on my tax form will i be liable to pay tax on the income/ property again?

Or will i benefit from the double taxation agreement between switzerland and the UK?
Many thanks for any help you can give!
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Old 13.09.2009, 15:51
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Re: Paying tax on property owned in UK?

I file taxes in Zurich and have had discussions about this and explanations, as follows, from the Treuhand who advises me. The "value" of your property is denoted to be 70% of the purchase price. It is not normal or expected to report market value. This would count as personal wealth. The amount of any mortgage on the property is deducted from that.

if you are renting it out, you would be expected to include the rent as part of your income in the tax return. If you are not receiving an income from the property, the tax authority would assume you get a return of 4% of the above value. You can deduct from this income, certain costs - the mortgage interest, and costs for repair and maintenance (but not normally for home improvements which are deemed to increase the value of the property). Keep your invoices and mortgage statements.

The system is reasonable and because my mortage and maintenance costs have been high, the effect has been to reduce my taxable income, in my case.

IF you do decide to include your property in your Swiss Tax return, you may require assistance from a Treuhand, to help with the German forms and to ensure you report it corrrectly. So let me know if you want to know the contact details for the Zurich Treuhand I use. Excellent service at a reasonable price, he speaks English brilliantly too. (I would advise against using KPMG etc, they don't have the local knowledge, and fees extortionate for not alot). To the local Treuhander, we are "big" clients and you'll get treated better than from the big 4. So my advice is go Local : )
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Old 13.09.2009, 18:25
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Re: Paying tax on property owned in UK?

Wow - thanks for all that information. You've made it seem a lot clearer!! I agree about the need to go local - anyone I have spoken to from big firms have given me very general, but not very useful, information!

I live in vaud, so i will ask around at work for a local advisor that is expert here.

Thanks again for your very detailed and helpful answer.
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Old 14.09.2009, 14:18
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Re: Paying tax on property owned in UK?

you have to declare the income and value only for tax rate purpose! It is not taxed in CH, as it is unilateraly exempted form taxation by Swiss tax law. It is nevertheless mandatory to declare it, because, as you are fully subject to taxation in Switzerland, your taxable income will be taxed at the applicable (progressive) rate for your entire (worldwide) income. Therefore if your income is 100 and the rental is 20, you will be taxed on 100, at the rate of 120. Is that clear?

Regarding the capital gain on the sale of the UK house, it will also be taxable in the UK, due to double tax treaty. The profit you will get from the house will be taxable with your wealth (wealth tax) at the end of the year, provided you have not invested it in another real estate abroad in the meantime.
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Old 15.09.2009, 16:45
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Re: Paying tax on property owned in UK?

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IF you do decide to include your property in your Swiss Tax return, you may require assistance from a Treuhand, to help with the German forms and to ensure you report it corrrectly. So let me know if you want to know the contact details for the Zurich Treuhand I use. Excellent service at a reasonable price, he speaks English brilliantly too. (I would advise against using KPMG etc, they don't have the local knowledge, and fees extortionate for not alot). To the local Treuhander, we are "big" clients and you'll get treated better than from the big 4. So my advice is go Local : )
Any idea what a local "Treuhänder" might charge for looking at my tax forms and telling me if I've done anything wrong plus advising on some ways to maybe optimize taxes?
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Old 12.02.2010, 14:16
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Re: Paying tax on property owned in UK?

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I file taxes in Zurich and have had discussions about this and explanations, as follows, from the Treuhand who advises me. The "value" of your property is denoted to be 70% of the purchase price. It is not normal or expected to report market value. This would count as personal wealth. The amount of any mortgage on the property is deducted from that.

if you are renting it out, you would be expected to include the rent as part of your income in the tax return. If you are not receiving an income from the property, the tax authority would assume you get a return of 4% of the above value. You can deduct from this income, certain costs - the mortgage interest, and costs for repair and maintenance (but not normally for home improvements which are deemed to increase the value of the property). Keep your invoices and mortgage statements.

The system is reasonable and because my mortage and maintenance costs have been high, the effect has been to reduce my taxable income, in my case.

IF you do decide to include your property in your Swiss Tax return, you may require assistance from a Treuhand, to help with the German forms and to ensure you report it corrrectly. So let me know if you want to know the contact details for the Zurich Treuhand I use. Excellent service at a reasonable price, he speaks English brilliantly too. (I would advise against using KPMG etc, they don't have the local knowledge, and fees extortionate for not alot). To the local Treuhander, we are "big" clients and you'll get treated better than from the big 4. So my advice is go Local : )
Hi, I am considering a move to Zurich, however if I can help it I would prefer not to sell my house and am not keen on renting it out. Looking at the above thread, am I correct in thinking that I can deduct the mortgage interest costs from my tax? How does that work?

Many Thanks
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Old 12.02.2010, 14:40
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Re: Paying tax on property owned in UK?

Income from property let in UK is taxable in UK as per normal UK tax return, tax allowances etc. Deductions against this income for repair, professional fees etc follow UK rules (there is a box for loan interest so assume that it can be deducted)
http://www.direct.gov.uk/en/MoneyTax...ome/DG_4017814

Here is the help sheet which came with my non resident tax form for property
http://www.hmrc.gov.uk/worksheets/sa105-notes.pdf

It is NOT taxed in Switzerland (double taxation treaty), but must be declared in Switzerland only for the basis of determining your total income tax rate.

Also note that you can apply to have the rental income paid to you gross rather than being withheld in advance. See http://www.hmrc.gov.uk/nonresidents/...9-scheme.shtml

Note also jointly owned property is taxed jointly between say husband and wife so can split the income between both and you both still get UK personal allowances.

You can also claim back on your UK return tax deducted by UK banks on interest gained (again double taxation).
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Old 12.02.2010, 14:52
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Re: Paying tax on property owned in UK?

[QUOTE=Glendyn;702134]Income from property let in UK is taxable in UK as per normal UK tax return, tax allowances etc. Deductions against this income for repair, professional fees etc follow UK rules (there is a box for loan interest so assume that it can be deducted)
http://www.direct.gov.uk/en/MoneyTax...ome/DG_4017814


Thanks...so what happens if its just left empty? Am I only allowed to claim my interest back if I rent it out?
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Old 12.02.2010, 14:58
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Re: Paying tax on property owned in UK?

The remark about interest was just as a pointer / reminder - it is actually not connected to the letting - you can claim it back anyway (or some banks will stop deducting it at source once you give them some forms etc)

If you are letting your house and it's empty you continue deducting expenses etc, as long as it is really for let!!!

If you leave it empty remember also the costs you'll have for council tax! Depened on the council etc but mine is 6 months free whilst waiting for tenants then full whack...
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Old 12.02.2010, 22:45
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Re: Paying tax on property owned in UK?

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Any idea what a local "Treuhänder" might charge for looking at my tax forms and telling me if I've done anything wrong plus advising on some ways to maybe optimize taxes?
They will charge you a small fortune. I was quoted a crazy amount, presumably based on them seeing the figures. The local tax office will check your tax form and correct it for free, since you provide them with copies of mortgage statements and bank statements.
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Old 12.02.2010, 22:48
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Re: Paying tax on property owned in UK?

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If you are letting your house and it's empty you continue deducting expenses etc, as long as it is really for let!!!

If you leave it empty remember also the costs you'll have for council tax! Depened on the council etc but mine is 6 months free whilst waiting for tenants then full whack...
Removing the beds or even just the mattresses in some councils should be enough to gain a 50% council tax reduction while the property is vacant.
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Old 13.02.2010, 09:37
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Re: Paying tax on property owned in UK?

[QUOTE=isascott;547906]I file taxes in Zurich and have had discussions about this and explanations, as follows, from the Treuhand who advises me. The "value" of your property is denoted to be 70% of the purchase price. It is not normal or expected to report market value. This would count as personal wealth. The amount of any mortgage on the property is deducted from that.



So does this mean that if I only have 25% equity in my house then my property wont constitute "personal wealth" for tax form purposes? Is it only when I have more than 30% equity that this will start to contribute towards weatlh tax?

The Treuhand that I use asks me to provide the value of my house and the amount of mortgage which there is on it.
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