The rental yield that needs to be declared on the foreign property, does it need to be the real rental yield, or is the hypothetical rental yield (based on the value of the property etc.)?

Does some double-taxation system come into place? There is a double-taxation agreement between Switzerland and Belgium. However, taxes in Belgium are waived since it is rental of first house for non-commercial purposes -- might this be waived away in Switzerland too then?

Thanks, and apologies for the many questions; this is not an easy topic...

What's your understanding of real vs hypothetical rental yield, so I know where you come from?

Real = the rental amount I get in the pocket.
Hypothetical -- perhaps I googled too much, and read/heard too much on this subject that I start to be very confused, but I heard much about taxation of property that is based on hypothetical rental yield in Switzerland.

I come from Belgium...

For clarity, a summary of my situation, with some hypothetical values:

* I own property in Belgium, which I bought about 5 years ago (value ~200.000 EUR), it's my first and only real estate property; a small house in a city center.

* I pay a mortgage in Belgium for this property (18000 EUR downpayment per year, of which 7500 EUR interest)

* Since end of 2009, I moved to Switzerland (Vaud), B permit, tax a la source.

* Since I left belgium, my house is rented out to private persons (12000 EUR rental yield per year)

* Belgium doesn't tax me on the rental yield (i.e., it is not considered as an income in Belgium, since it a first property rented out to private persons -- maybe this is different for the Swiss point of view); I only pay a small fixed amount (~250 EUR/year -- cadastral income) which is independent from the rental.


Questions:

* Should I declare the property (as I understood from previous posts, yes)

* How much would it costs me/would I benefit?

* If I do not declare, what are the sanctions (I understood: back payments of tax + fine (?) )

Ok. Hypothetical rental yield taxation (rental revenue would be the more appropriate word) only applies when the residence is not rented out (i.e. either your owned primary residence, or a secondary residence such as a holiday home). As far as federal taxation is concerned, the empirical rule to determine the rental value is "70% of the average market rental value". (as a side-note, the system is advantageous to owners having such a high debt that the hypothetical rental value and the debt costs cancel each other out).

Anything outside this is taxed on actual yield (well, revenue).

In terms of taxation, as far as revenue is considered, you'll be taxed on net revenue (i.e. rental-mortgage interest) and as far as wealth is considered it's house value - outstanding mortgage.

How it is going to impact you - obviously negatively as your income will increase by 4'500 EUR per year. The actual figures depend on your canton and commune of residence...

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It is worth noting that a % of the mortgage interst will be deductable against your swiss tax. The swiss will take the view it contributes to your life style hence the property although not taxable in CH will be included in the determination of your wealth tax bracket. you may then off set your mortgage interest in the same % as your Belgium wealth v your swiss wealth

AS to taxing the income you recieve you will need to refer to the swiss/belgium tax treaty

Hello, I am starting to figure out what and how to declare in ZH for a swiss resident with assets abroad. THe Steueramt has a free tax declaration software btw which appears very well made. I am surprised it is free.

Anyway, the main question I have and could not find an answer too, even looking at ZH or other cantons' explanations is how I am supposed to value a piece of real estate (flat) in another country (for taking into account in my wealth applicable tax). Btw I have well understood that foreign real estate value and hypothetical rental yield will be used to determine the tax rate on wealth and income, but that I will not be taxed at that rate on those foreign elements, so that is not my q.

I understand that for CH valuation is based on detailed cantonal rental yield tables and a capitalization formula, but of course no such thing exists for Ausland. Similarly, for income, rental yields are not tabulated.

Am I supposed to estimate the same parameters as a canton would do, based on my research and do a calculation, or can I simply use substantiated market value and market rent ? After all, market value and market rent are observable values that incorporate the parameters.

THank you for any insight and best regards.

ZRH tax office have not been too strict in my case. I declared the purchase price (I provided no proof) instead of the official valuation price carried out by my mortgage provider because the purchase price was lower, I want to pay less wealth tax!

I do provide the inforamtion on the foregin mortage I have on this property and I suppose that the numbers declared there tie in with what the property is.

If the tax authorities ever asked me for the proof of purchase price or the valuation, I would have no hesitation in giving it to them as I have teh documentation. I declared like this in VD 2007, ZRH 2008 and they excepted/settled my return without question. No response from ZRH 2009 yet.

What ever number you declare be in a position to back it up with some sort of official document eventually. [this is true of any number you enter in your tax return]

For the 'perceived rental income' on your own holiday home abroad (no actual rental revenue generated) I use 5% of value declared above. Again this has been accepted without question.